Tax Sheltered Accounts
Administration
INTRODUCTION
The IRS code regulations, which provides limits on
the contributions to a 403(b) plan, states that it is the employer's responsibility to not
only monitor contribution limits, but to also report any excess contributions to the IRS.
TSA ADMINISTRATION
National Plan Administrators, Inc. offers a
service which is designed to significantly reduce the administrative burden to the
District and limit their liability.
NPA provides: One Slot Billing, Hold Harmless Agreements, Solicitor's
Agreements, Employee Liaison, Solicitor Liaison, Exclusion Allowance Calculations, Forms
Standardization
The purpose of TSA administration is to eliminate 90% of the District's
administration burden and 100% of their liability.
ONE SLOT BILLING
NPA proposes that the District eliminate all
current TSA billing slots and create a TSA/NPA slot for total deductions from all
employees.
NPA will provide a monthly bill to the District that includes a summary
of all providers and a total for each provider, a detail list for each provider showing
each participant and respective amounts, and an alphabetical listing of all employees
showing their respective providers and the amounts. The District will remit the funds to
NPA. NPA will balance and remit to the various providers within 48 hours (legal holidays
and weekends excluded). Any/all additions to the system will be coordinated through
NPA.
HOLD HARMLESS AGREEMENTS
The Hold Harmless Agreement's purpose is to remove
all product liability claims from the District and direct them toward the Provider.
If an employee participates in a 403(b) plan with a particular provider
and has a negative experience, (investment did not live up to expectations), the District
should not be involved with litigation.
By collecting Hold Harmless Agreements from the 403(b) and 403(b)(7)
providers, NPA will eliminate any product liability claims that may arise against the
District.
Both the 403(b) and 403(b)(7) retirement plans are maintained by salary
reductions and, as such, contributions are actually considered employer provided.
Since the federal perspective is that the 403(b) is employer paid, the implication is that
any liability would be incurred by the employer. After all, the employer is responsible
for the quality of the investments. Unfortunately, this places the District in a
"catch 22" situation; wherein Federal law implies that the District is liable
and State law requires that the District allow employees to choose any provider that they
wish. Therefore, the Hold Harmless Agreement was implemented in an attempt to eliminate
any possibility of this dilemma. Additionally, National Plan Administrators, Inc. will
also indemnify the district as added protection.
SOLICITOR AGREEMENTS
NPA assists the District in developing a written
policy and procedure that takes the form of a Solicitor Agreement. All solicitors are required
to sign this agreement in order to abide by the District's policies and procedures.
Any solicitor who violates said agreement would lose any and all privileges of soliciting
the Districts employees.
Some items addressed in the Solicitor's Agreement are: Are solicitors
allowed on campus to solicit employees? May a solicitor have an appointment with an
employee during a break period? May solicitors put sales materials in employees campus
inter office mail. What is the cut-off date for changing payroll?
EMPLOYEE LIAISON
NPA will serve as the liaison for District
employees with regard to any questions or problems they may have about their 403(b) and
403(b)(7) plans. While we do not presume to have all the answers, we do accept the problem
as a valid one and will do whatever it takes to alleviate the situation.
Employees routinely call administration with questions like: What is a
Tax Sheltered Annuity? How do I participate? What companies can I use? How does it work? I
started one two months ago and haven't received anything. Are you sending in the money?
I'm retired and can't find my agent, could you... How do I start a plan without an agent?
Would you help me complete the paperwork? What is the maximum I can do? How do I cancel
and get my money back?
NPA proposes the employees be directed to us by calling - (800)
880-2776. NPA does not sell 403(b) or 403(b)(7) plans, nor does any of its affiliates. We
are an administration company only, and are simply attempting to remove the burden of
employee contact regarding TSA's from the District.
SOLICITOR LIAISON
NPA proposes to act as the contact liaison for all
solicitors. A solicitors packet will be created that includes the prescribed forms: Salary
Reduction Agreement Hold Harmless Agreement, Solicitor's Agreement, and Disclaimer form.
This packet will also instruct the solicitors to direct all contact/correspondence through
NPA. Any direct contact with the District's administration staff should be met with
"Here is your solicitor's packet and forms. Please contact NPA with any questions you
may have. Thank you".
All paper work will be directed through NPA where it is audited for
approved vendors and approved solicitors. After a maximum exclusion allowance calculation
is performed, and the paper work audited, a summary worksheet is created for the District.
The original paper work will then be sent to the District to be included in the employee's
personnel file, thereby reducing all agent/solicitor contact with the District.
EXCLUSION ALLOWANCE
Internal Revenue Service Publication 571 declares
the employer is responsible to report any excess contributions that employees have made to
their 403(b) or 403(b)(7) plan. In other words, the District must submit W-2 forms on all
employees who have over contributed to their TSA plan.
As a result, NPA will calculate a Maximum Exclusion Allowance on each
new participant to insure that both the District and the participant are protected.
FORMS STANDARDIZATION
NPA will prepare and provide all forms associated
with 403(b) and 403(b)(7) plans, and all forms will receive prior approval by the
District. It should be noted, however, that while having 100 different providers does not
mean that we are required to have 100 different types of forms. Our forms will include:
Hold Harmless Agreements, Solicitor's Agreements, Salary Reduction Agreements, and
Disclaimer Statement.
NPA will create any other forms associated with TSA Administration that
may be needed by the District.
CONFIDENTIALITY
During the time information that identifies an
individual covered by a plan is in the administrator's custody or control, the
administrator shall take all reasonable precautions to prevent disclosure or use of the
information for a purpose unrelated to administration of the plan.
The administrator shall disclose information described only:
- in response to a court order;
- for an examination conducted by the commissioner;
- for an audit or investigation conducted under the Employee Retirement Income Security
Act of 1974;
- to or at the request of the insurer or plan sponsor; or
- with the written consent of the identified individual or his or her legal
representative. Trade secrets, including the identity and addresses of policyholders and
certificate holders, are confidential, except the insurance commissioner may use that
information in a proceeding instituted against the administrator. The plan sponsor is
entitled to a continuing access to these books and records sufficient to permit the
relevant parties to fulfill contractual obligations to insureds and plan participants.
FEES
The fee for TSA administration is determined by
the number of providers and participants.
CONFLICTS OF INTEREST
Neither NPA nor any affiliate of NPA receives any
compensation for the sale of TSA's. We are an administrative company only. In our opinion,
selling TSA products and administering the same would be a major conflict of interest. |
