individuals responsible for menu selection can be personally liable for losses if the menu and any outside advisors are not monitored on a regular basis and adjusted consistent with the 'prudent expert' standard of care.
ORLANDO, Fla. (PRWEB) August 12, 2008
"Sponsors of 403(b) retirement plans such as hospitals, schools, universities and other tax-exempt organizations have a little less than five months to review their plans and make any necessary changes," said Chief Marketing Officer Tom Pittman.
Such employers "face a number of challenges and opportunities in complying with these new rules," added Newport's Vice President and Chief Counsel Sam Brkich. "These new regulations will require all employers who contribute to a 403(b) arrangement to adopt a formal plan document by December 31, 2008. This includes employers whose role is limited to administering payroll deductions." Brkich noted that sponsors of these more "passive" 403(b) plans will not become subject to ERISA by adopting a written plan document.
"What we call 'active' sponsors, in other words those actively involved in plan design and administration and are subject to ERISA, may already have such a document. These sponsors will still want to review their current plans for compliance with the 403(b) regulations, since failure to comply could result in substantial IRS penalties."
Brkich said that the upcoming document deadline provides an opportunity for active sponsors to review the plan's overall design. "403(b) plans are eligible for design enhancements authorized under the Pension Protection Act, such as automatic enrollment and the qualified default investment alternatives, or QDIA," he observed.
Sponsors of ERISA 403(b) plans also should review the plan's delegations of fiduciary duties, especially with respect to investments. According to Brkich, "individuals responsible for menu selection can be personally liable for losses if the menu and any outside advisors are not monitored on a regular basis and adjusted consistent with the 'prudent expert' standard of care."
Plan fiduciaries are also responsible for monitoring expenses, Brkich remarked. "403(b) plans subject to ERISA will be required to comply with the new participant disclosure regulations issued July 22, 2008. The rules would require disclosure by November 30, 2008 in order to meet the proposed January 1, 2009 effective date."
Pittman commented that Newport is a recognized industry expert in each of these critical aspects of plan design and execution, with on-staff experts in consulting, legal, communications and plan administration. A full-service provider of retirement and benefit plans, Newport has earned industry accolades for its plan sponsor and participant services. With corporate headquarters in Orlando, the firm maintains service centers in Charlotte NC, Greensboro NC, La Crosse WI, Orlando FL, Richmond VA, St. Louis MO, and St. Petersburg FL.
About The Newport Group
Founded in 1984, The Newport Group is a leading retirement services and asset management firm—specializing in the creative design, funding, and administration of qualified and non-qualified retirement plans as well as co-fiduciary investment consulting services. Through its innovative and customized solutions, Newport is uniquely positioned to satisfy the distinct financial needs of employers and employees, and has done so for hundreds of the country's largest and best-known companies. For more information, visit http://www.newportgroup.com.
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