2019: Quarter 4 Newsletter
Plan Eligibility Notice Requirements
To comply with the 403(b) Plan Universal Availability requirement, you must notify all eligible staff members at least once a year about eligibility to participate in the 403(b) Plan. As part of our administration services, AFPlanServ provides you with an annual Sample Eligibility Notice to help meet this requirement.
Sample Notice►
You may distribute the sample in its entirety or use it as a template for your own customized notification. If you're unsure who is eligible for participation, please refer to your Plan Adoption Agreement or contact us.
Did you know?
The Internal Revenue Service (IRS) announced new contribution, deferral, and catch-up limits for retirement savings. Effective Jan. 1, 2020, the new limits are:
- Elective deferral limit—$19,500
- Catch-up contribution limit (for those age 50 and older)—$6,500
- Annual additions limit—$57,000
Please be aware of these new limits when working with your employees on their 2020 deferrals. If you have questions, contact us.
Monitoring of Plan Limits
To help ensure that contribution amounts do not exceed IRS limits, AFPlanServ works with you to monitor employee contributions. This helps lower the risk of excess contributions and allows for corrective action to be taken as soon as administratively possible.
In the event a participant is found to have contributed more than the annual limit, we will notify the participant, the provider that received the contribution, and you.
If an excess contribution is identified after the calendar year ends, we will notify you and the provider, and a corrective distribution will be processed to the participant.
Hardship Changes
The IRS recently published final regulations amending the rules governing hardship distributions for 403(b) Plans. The following key changes are effective Jan. 1, 2020:
- Elimination of 6-month deferral suspension period
- Elimination of rule that previously required available plan loans be taken prior to receiving a hardship distribution
- Casualty losses no longer tied to a disaster
- Catch-all "Facts and Circumstances" test eliminated
- New Withdrawal Reason—Disaster Event
AFPlanServ will implement all of these changes. For further information on these changes, please refer to this article. Or contact us with questions.
Frequently Asked Questions
Q: What is Universal Availability?
A: Universal Availability refers to the requirement that all eligible employees be given an opportunity to participate in your 403(b) Plan. Notice of eligibility must be provided at least annually
Q: Am I required to keep a copy of the plan eligibility notice?
A: Employers should maintain written procedures for distributing eligibility notices. This could include:
- Copies of notices
- List of employees notified
- Record of whether notification was mailed or emailed
- Data proving meaningful notice was provided to all employees
Plan Reminders
When processing contributions, please remember that timing is very important. All deducted contributions must be remitted to the respective Investment Provider no later than the 15th calendar day of the month following the date the contribution was deducted from payroll.
Please check the Operational Guidelines to ensure you are adhering to the items listed. If you have any questions, please contact us.