Starting in 2009, 403(b) plan sponsors will have to comply with new regulations that are intended to improve the governance of those plans. The reforms, in part, require written plan documents to list the number of vendors permitted in the plan, the investment options available and the requirements for loans and hardship withdrawals.
Recently, however, the Internal Revenue Service extended the deadline for sponsors to have in place a comprehensive set of summary plan documents by Dec. 31, 2009.
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"The final regulations will mean increased fiduciary responsibility and will require a more proactive management of plans by employers in the tax-exempt market," says John Begley, executive vice president, Fidelity Investments.
Begley believes that "the new regulatory environment has resulted in institutions taking a closer look at their 403(b) providers and making the changes necessary to make sure they are well equipped to handle the administration of their plans." Furthermore, employers that hired more than several providers will now consider using just two or three.
Meanwhile, the SPARK Institute has created a Q&A Web site for employers sponsoring 403(b) plans to post technical questions about the plans, including compliance with the most recent regulations governing them.
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