All Garnet Valley School District staff, including administrators, teachers, and support personnel, can join various IRC 403 (b) employee payroll withholding tax shelter approved vendor programs offered through the district's 403 b master plan and selected in consultation with the district's bargaining groups.

 

You are invited to participate regardless of whether or not your position is full-year, part-year, full-time, part-time or even as a daily or long-term substitute employee.

 

As a district employee, you can also participate in the district's 457 (b) employee payroll withholding tax shelter plan administered by Kades-Margolis.  A link to the 457 (b) plan document is provided below

 

On June 7 2006 ACT noted that IRS guidance did not require 403 (b) programs to maintain written plans, and that the IRS lacked procedures to ensure compliance.  As a result of these observations, new IRS regulations were issued, the bulk of which were effective January 1, 2009. These new regulations required that all U.S.A. school districts adopt district master plans which provide for the participation of tax shelter 403 (b ) vendors who agree to information sharing arrangements.  Also as of January 1, the district began to use Employer Admin Services, Inc. (EASI) as its common remitter, third party administrator, to process payments from employee tax shelter payroll witholdings. 

 

Under the new IRS 403(b) regulations, participants that exchange their 403(b) account to another 403(b) account may be “at risk” if the employer’s plan document does not permit exchanges, and if the vendor receiving the assets does not enter into an information sharing agreement with the employer. “At risk” means that the entire value of the participant’s exchange may become fully taxable, including any applicable IRS imposed penalties. As per the IRS, the risk for any exchanges during the interim period fell completely on the participant.
 
If you are planning to make an exchange to your 403(b) account, you should verify with the receiving vendor that they have entered into such an agreement with your school district. The IRS has stated that the employer may enter into such agreements at any time prior to January 1, 2009 and retroactively permit the exchange by allowing it the plan document.  The district's master plan document does allow for exchanges as defined by the IRS.
 
Transfers taking place prior to September 25, 2007 were “grandfathered” from the new regulations and will be evaluated based on their compliance with current rules.

 

Other Issues Regarding Transfers
The new regulations state that the value of the “accumulated benefit” is not less after a transfer or exchange then prior to that action. While account surrender fees are acceptable, transfer or exchange fees are not. In addition, the recipient contract must have distribution restrictions at least as restrictive as the sending contract.