403(b) Regulations Information Sharing Agreement Requirements
Participants, employers and plan providers have more steps to complete if your organization makes contributions to more than one retirement plan provider or allows plan participants to transfer money from one 403(b) investment provider to another while in-service. Effective Sept. 25, 2007, the new mechanisms for transfers between 403(b) investment providers are called investment exchange, contract exchanges or plan-to-plan transfers. (These new rules do not apply to rollovers between retirement plans.)
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 new rules do not apply to rollovers between retirement plans.)
| Activity |
Information Sharing Requirement |
| Contributions to more than one provider |
Employer must ensure coordination of information between vendors |
| Investment exchange |
Employer must ensure coordination of information between vendors |
| Contract exchange |
Written Information Sharing Agreement required |
| Plan-to-plan transfer |
Information sharing not required |
| Direct rollover |
Not affected by new 403(b) regulations |
Your decisions may present some new accountabilities and challenges. You may need to:
- Establish an Information Sharing Agreement (pdf) documenting responsibility for sharing information if you allow plan participants to move money within your single 403(b) plan from one investment provider (with a payroll slot) to a vendor (who does not occupy a payroll slot).
- 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.
GuideStone Financial Resources has been dedicated to enhancing the financial security of our plan participants for 90 years. Our employees are highly experienced with church retirement plans and stand ready to help you. Please email us or call 1-888-98-GUIDE (1-888-984-8433) for additional information.
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This information should not be considered tax or legal advice. GuideStone stands ready to assist your organization as you work with your legal and tax advisers by providing resource information that you and your adviser may find beneficial. |