2019: Quarter 1 Newsletter
Universal Availability
The universal availability rule means that if an employer permits one employee to defer salary into a 403(b) plan, the employer must extend this offer to all organization employees. Some exclusions to this rule may apply, including:
- Employees who will contribute $200 or less annually
- Employees who participate in a 401(k), 457(b) Plan, or additional 403(b) Plan of the employer
- Students performing services described in IRC Section 3121(b) (10)
- Employees who normally work less than 20 hours per week
- Nonresident aliens
If your Plan excludes all employees who work 20 hours or less—approximately 1,000 hours per year—you must complete two tests to ensure that no one is being excluded in error.
- Completed on the employee’s date of hire.
- Completed each subsequent 12-month period, or every Plan year.
Improper exclusion of employees can put your Plan at risk of non-compliance. Look for information about correcting this kind of operational error in our upcoming newsletters. If you have immediate questions or concerns, please contact us.
Common Remitter Service
By allowing you to submit all Plan contributions in a single payment, common remittance helps you simplify your payroll process at no additional charge to you.
Simply submit a census file of the Plan participants, policy file of the consolidated bill from all providers, and a register file of the deductions from all participants. Upon receipt, we'll separate contributions among the approved providers, reconcile, and forward detail and dollars to each provider.
Additional benefits include:
- One process for your payroll department
- One file (not a separate file for each provider)
- Secure, electronic transfer of funds
Note: When processing Plan contributions from payroll, deductions must be in accordance with approved salary reduction agreements. And all contributions must be forwarded to providers in a timely manner.
If you are interested in our common remitter service, please contact us.
Information About Plan Documents
403(b) and 457(b) Plan documents consist of all the initial documents that collectively make up your written Plan. These documents describe the available features of the Plan, eligibility, rules, and operational guidelines.
Your Plan must maintain compliance with IRC Section 403(b) and/or IRC Section 457(b), and any other applicable rules or regulations published by the Internal Revenue Service (IRS).
When your Plan was established, you received copies of the following documents for your 403/457(b) Plan:
Additional benefits include:
- AFPlanServ Volume Submitter Plan Document (with Adoption Agreement)
- Administrative Services Agreement
- Investment Provider Agreement for Retirement Plans
- Employee Eligibility Communication Records
If you need help locating your Plan documents, please contact us.
Frequently Asked Questions:
Q: Can a participant contribute to 403(b) and 457(b) Plans?
A: Yes. The 403(b) and 457(b) limits are not aggregated. Therefore, an employee may simultaneously contribute the standard limit of $19,000 - or $25,000 if over the age of 50 - to each Plan, if less than the employee's compensation.
Q: Is there a maximum for 403(b) Plan employer contributions?
A: If permitted in your 403(b) Plan, the 2019 maximum combined amount that both the employer and employee can contribute is generally the lesser of:
- $56,000, or
- the employee's includible compensation for their most recent year of service.
For 457(b) Plans, the 2019 maximum combined limit is $19,000.
Plan Reminders
Plan operations must match the written 403(b) Plan terms. To avoid mistakes, convey any operational or written Plan changes to AFPlanServ prior to implementing changes. Operational errors may be corrected under IRS guidelines. Look for information about correcting Plan errors in our upcoming newsletters.
If you need more information about your role as the Plan Sponsor, we're happy to help!