Frequently Asked Questions

December 9, 2008

To:    All 403(b) Tax-Deferred Contribution
Participants
From: David Misak
Human Resources Director
Re: 403(b) Retirement Plans Changes

The purpose of this letter is to update you as to SWOSU’s efforts in becoming compliant with the new IRS regulations impacting 403(b) retirement plans.

Why are we making changes at this time?

  • The IRS has implemented new regulations pertaining to 403(b) retirement plans (voluntary employee contributions to tax-sheltered annuities).
  • These new changes go into effect on January 1, 2009.

What are some of these changes?

  • All SWOSU’s current agreements for salary 403(b) salary reductions will cease effective December payrolls.  New agreements may be initiated with the new vendor, Lincoln Financial Group.
  •  All 403(b) plans must be maintained pursuant to a written plan document.
  • The requirement that the written plan comply in both form and operation increases administrative and compliance oversight responsibilities of SWOSU to ensure compliance, as well as maintaining the 403(b) plan.
  • SWOSU must know who current vendors are, as well as the investments and associated fees of the vendors.  Plan sponsors must also ensure that contribution limits are not violated, that the plan complies with nondiscrimination requirements, and that vendors enter into information sharing agreements with the plan sponsor.

What has been done so far?

  • The Regional University System of Oklahoma (RUSO), our governing board, issued a request for proposal (RFP) for a consultant with expertise in retirement investments.  This process resulted in the selection of the AJ Gallagher firm.
  • A second RFP was distributed for vendors.
    • All current vendors (from each RUSO institution) were invited to respond to the RFP.  However, only a minority did respond.
    • As a result of these new regulations, some 403(b) vendors have elected to discontinue their 403(b) products.
    • Four vendors were selected to make presentations.  TIAA-CREF was one of the vendors asked to present to the committee.  The committee overwhelmingly recommended the Lincoln Financial Group.

So, how does this impact me?

  • If you wish to make contributions into SWOSU’s 403(b) retirement plan after January 1st, you will have to do so through Lincoln Financial Group.

What happens to my current balance with other vendors?

  • You may leave your current balances with other vendors where they are.  However, you may not make additional tax-deferred contributions into these funds (unless they are one of the funds offered via Lincoln), or;
  • You may transfer the current balance into one of Lincoln’s plan funds.

Time is short and information is scarce; so what if I need more time?

  • We realize the short timeframe in which we have to work, and we do not want to short-change the education opportunities that Lincoln will be providing.  In order to give everyone a little more time to attend a training session and/or meet individually with a Lincoln advisor, we are working with Lincoln to establish a default account into which the initial contributions may be deposited.  From there, after you have had an opportunity to make an informed decision, you can transfer the contributions in the default account into whichever account(s) you select as a part of your enrollment process with Lincoln.

When can I make changes in the amount I am contributing?

  • You may make changes to the amount, as well as start or stop contributions, to your voluntary 403(b) with any monthly pay cycle.

What if I want to contribute to a fund that is not offered by Lincoln?

  • You may contribute to an after-tax annuity with other vendors (TIAA-CREF, etc.,) of your choosing.  You would need to contact the vendor yourself and make those arrangements.  Note: There is no withholding via payroll for this type of contribution and you would lose the pre-tax advantage.

What’s the good news?

  • As if being in compliance with the IRS regulations is not enough, by moving to a sole vendor, as opposed to the RUSO systems current 49 vendors, we should experience several positive changes in our 403(b) plan, including:
    • Improved retirement planning educational opportunities, via one-on-one and in-person retirement advise on a more frequent and recurring basis.
    • Offer more “best in class” investment options to our faculty and staff.
    • The opportunity to reduce vendor fees (yes, you pay fees now).
    • Improved ability to monitor the investment performance of the options in the 403(b) plan.
    • Simplified communication regarding investments.

What’s the next step?

  • If you desire to make January contributions with Lincoln Financial Group, you need to complete a 403(b) Voluntary Deferral Election.  The completed form needs to be received by the Human Resources Office by Friday, December 19th.

Any final thoughts from HR?

  • We realize that change is often accompanied by some stress. And, when that change is an uninvited modification to your retirement investments, people naturally become more concerned. 
  • I want you to know that representatives from the administration and faculty senate are working to limit the disruption and the confusion this change has on you.
  • Your 403(b) balance is your money.  And, while it may seem that time is short, I would encourage you to take a deliberative approach to your retirement investment plan.  The deadline that has to be met by January is largely an administrative one (Plan Document, recordkeeping, etc.).  You, as an individual, have some flexibility.  As mentioned earlier, you can place your monthly contributions into a default account giving you time to meet with financial counselors.  But, ultimately this is your money and you need to make the choice that best meets your personal needs, whether that is the default account, stopping contributions for a few months while you study your options, or using a retirement account outside of SWOSU.

What if I still have questions?

  • You are welcome to contact any of the following individuals:
David Misak david.misak@swosu.edu   ext.3248
Debra Purdum debra.purdum@swosu.edu ext. 3246
Tom Fagan tom.fagan@swosu.edu ext. 3037
Les Ramos les.ramos@swosu.edu ext. 3272
Stephen Burgess stephen.burgess@swosu.edu ext. 7015

In closing, please know that we share new information with you as it becomes available.  Thank you.