Yes. But if your church uses GuideStone as your sole 403(b) retirement plan provider, the application of these changes will be simplified.

• If your church allows plan participants to invest with multiple retirement plan providers or to transfer funds to other providers, compliance with these new regulations will be more complex.
• Compliance may also be more complex if your church has subsidiary organizations such as bookstores or affiliated ministries.
• Churches are excluded from some portions of the new 403(b) regulation changes because plans of churches are not subject to certain retirement plan nondiscrimination provisions that apply to church-related organizations such as colleges, universities and hospitals.

The following list includes a brief summary of the most significant 403(b) regulation changes. Those marked with an asterisk (*) are the regulations that apply to churches participating in the Church Retirement Plan through GuideStone Financial Resources.

• *Written plan requirement. Churches that sponsor a 403(b) plan must maintain written documents that describe all material plan provisions.
• *Contract exchanges and plan-to-plan transfers. Participants, employers and plan providers now face new requirements if a plan allows participants to transfer 403(b) funds in their retirement account from one plan provider to another. Employers with multiple providers will need to enter into information sharing agreements with all approved providers, and participant transfers along with certain other participant transactions will now require employer consent. (These new rules do not apply to rollovers between retirement plans.)
• Timing of in-service distributions from employer contribution accounts. This provision impacts plans that allow employees to withdraw employer-contributed dollars while still in service to that employer without the occurrence of some event, such as reaching a specified age. Since the Church Retirement Plan does not make provision for in-service withdrawals of employer dollars until participants are 59½, this regulation change is already satisfied for churches that use only the Church Retirement Plan.
• New definition of severance from employment.The new regulations provide additional clarity to legal terms and phrases, one of which is “severance from employment.” For most churches this change will have no impact. But for churches that have complex legal structures and separate subsidiaries, there may be some impact.
• Universal availability. Some 403(b) plans are subject to annual retirement plan nondiscrimination testing that demonstrates the plan does not discriminate in favor of highly compensated employees in design or practice. This regulation is not applicable to churches.
• Effective opportunity required. This is related to the universal availability provision above and is also not applicable to churches.
• *Requirement to follow plan terms. As mentioned earlier, all 403(b) plans must be documented in writing. A failure to follow these written plan provisions can result in adverse tax consequences for individual plan participants and/or all plan participants, depending upon the nature of the failure.

Churches that are single legal entities and do not have subsidiary organizations should do the following by December 31, 2008:

• Stay informed. While the new IRS 403(b) regulations have been released, guidance is still unfolding. To keep you appraised of all new developments, GuideStone has prepared a special Regulation resource page on our Web site.
• Develop written policies and procedures. GuideStone provides general plan documentation for the Church Retirement Plan. However, since each church in this plan has flexibility related to certain plan provisions, your church must develop and maintain additional written policies and procedures that address:
• Which employees are eligible to participate in the retirement plan?
• What contributions will the employer/church make on behalf of employees?
• Will the church use GuideStone as the sole provider for the plan or allow multiple plan providers? (A decision to allow multiple providers will require the church to enter into information-sharing agreements with all approved providers as well as assume responsibility to work with each provider to achieve plan compliance.)

GuideStone is developing documentation templates your church can use to document rules and procedures to enable you to meet these new written requirements.

• Become familiar with the new contract exchange and plan-to-plan transfer requirements. Participants, employers and plan providers have more steps to complete if your church allows plan participants to move or transfer money from one employer-sponsored provider to another. In the past, this sort of money transfer was called a “90-24 transfer.” Effective September 25, 2007, 90-24 transfers no longer exist.

The new mechanisms for moving money among multiple providers are called “contract exchanges” or “plan-to-plan transfers.” Money can still be moved, but there is now a new wrinkle. To perform a contract exchange, the employer and the provider receiving the 403(b) money must enter into an agreement to exchange required information related to compliance with the 403(b) requirements. An exchange will no longer be allowed between providers with which an employer has no formal relationship. A plan-to-plan transfer occurs between two unrelated employers’ 403(b) plans. For example, a participant may elect to transfer money from a former employer's 403(b) plan into his/her new employer’s 403(b) plan. These particular provisions took effect on September 25, 2007. (These new rules do not apply to rollovers between retirement plans.)

This change presents some new accountabilities and challenges. As discussed, your church will need to establish information-sharing agreements documenting responsibility for sharing information if you allow plan participants to move money within your single 403(b) plan from one provider to another. Your church will also need to provide written consent when participants request certain types of plan distributions, such as a hardship withdrawal or plan loan.

The IRS will release additional clarification to help employers and providers with the operational aspects of this change. Again, plans that use GuideStone as their sole provider will see minimal impact from this new regulation.

• Review plan terms. As can be expected, the IRS mandates that your church administer its 403(b) plan in the way it is written. This dovetails with the earlier point that the church must maintain a written plan that meets certain legal standards. The plan must have all the right provisions and those provisions must be followed. Disregarding this requirement is deemed an “operational failure.” Certain failures by the employer in following the plan could adversely affect every individual for which the failure occurred.

January 1, 2009. However, it is important to note that transfers and exchanges made after September 24, 2007 will be subject to the contract exchange and plan-to-plan transfer provisions. If the employer is not in compliance (with written plan documents and information-sharing agreements among various plan providers it uses) then the transfers and exchanges could be subject to taxes and penalties imposed by the IRS.

Yes. The general rule under the final regulations is that all contributions must be made to the provider within “a period that is not longer than is reasonable for the proper administration of the plan.” The regulations indicate that employee elective deferral contributions should be deposited in an administratively feasible period, typically within 15 business days following the month in which these amounts would have been paid to the employee, if not deferred. The key thought is that the IRS is seeking to ensure that contributions are properly and efficiently handled by the plan sponsor from the point of withholding to the point of contribution to the plan.

Check GuideStone’s 403(b) Resource page for updates regarding 403(b) regulation changes. GuideStone has a dedicated team of industry professionals with years of experience related to church plans. Our focus is on serving you and meeting your needs with excellence.