Posted on 01/04/2009 12:41:59 PM PST by Libloather
Teachers may see 403(b) retirement plan changes in 2009
By David Pitt
Associated Press
Saturday, January 3, 2009 11:56 AM CST
DES MOINES, Iowa -- School teachers, college professors and hospital employees should keep an eye out for changes in their retirement plans this year.
That's because they are among the 10 million workers at nonprofit and educational organizations who may face fewer investment choices and tighter restrictions on how they can use the money in their retirement plans because of new IRS rules.
The IRS is requiring retirement plans designed for tax-exempt nonprofit groups and some public sector workers - called 403(b) plans after the IRS code section that created them - to comply with stricter rules. The IRS has allowed such plans to operate with less oversight than their for-profit world counterpart, the 401(k), for the last 40 years.
It's a significant development because employers, which include school districts, religious groups and nonprofits with lean staffing, must take a more active role in managing their retirement plans. The 403(b) market held more than $670 billion in assets as of mid-2008, according to estimates compiled by Windsor, Conn.-based LIMRA International Inc., a research and consulting company.
Organizations have had a little more than a year to figure out what to do. That may seem to be plenty of time, but 12,000 school districts and hundreds of thousands of tax-exempt nonprofit groups don't have trained full-time benefit managers to oversee their retirement plans, said Kevin Watt, vice president of business development for Topeka, Kan.-based Security Benefit Corp.
"The regulations put the employer smack dab in the middle of now owning a plan." Watt said. "You can imagine not having any oversight, and not needing to do anything, to being completely responsible almost overnight."
(Excerpt) Read more at pantagraph.com ...
this is MOST important for non-teachers, since teachers already have a nice comfy defined pension plan .....non-profit hospitals for the most part do not....its strictly cash balance or a very minimum contribution for a 403b.......
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