LAS VEGAS (May 4, 2012) – The National Tax Sheltered Accounts Association (NTSAA) Compliance Conference in Las Vegas was by all accounts a real success. Practitioners from all segments of the tax-exempt and governmental plans community gathered to discuss issues ranging from the highly technical to the contextual as the industry clearly continues to deal with the aftermath of the significant regulatory reform of 2007.
And it’s not surprising that significant issues remain unresolved. By the Internal Revenue Services’ (IRS) own account, the 403(b) regulatory reform of 2007 represented the first major update to these provisions of the Code in 43 years. With large segments of the 403(b) governmental market exempt from ERISA, and all of the gradual operational impacts since, these changes are continuing to have day-to-day impact in plan operations.
And it is readily apparent that the pace of changing regulations does not appear to be slowing down. Having swallowed the most dramatic impact of plan document requirements and multi-vendor compliance coordination, new fee disclosure requirements and major initiatives still pending from the IRS—from the prototype plan document program, yet to be announced, to an much anticipated update to the Employer Plans Compliance Resolution System (EPCRS), a system designed before the 403(b) plan document requirement even existed—keep practitioners of all stripes at alert.
The conference featured technical and legal experts, focusing on topics ranging from plan design advantages that can be achieved by combining multiple plans—457, 403(b), 401(a), 414(m)—and ways to maximize employer contributions in designing attractive benefit programs to support public sector recruitment and retention efforts. Key break-out sessions on the nuances of steeple-church and church related organizations were led by renowned specialists and experts in the field.
Perhaps the most significant shoe yet to drop for the non-ERISA segment of the market is the ERISA-effect—the best practices framework that ERISA-exempt markets will ultimately adopt as a result of regulatory momentum in the ERISA world. In the public sector, the impact of a more hands-on approach to managing benefits programs comes with a tangible price tag as well in allocating already scarce resources and staffing demands. It will be important that product and investment providers, third party administrators and financial advisors be prepared to help those sponsoring non-ERISA plans establish and manage the “best of the best” practices that help them and their employees maintain a high comfort level with the 403(b) sponsored plan – and NTSAA ASPPA is dedicated to helping with the educational process that will be needed by all parties.
As an organization, NTSAA isn’t sitting on the sidelines. With the backing of ASPPA resources, NTSAA has collaborated to develop a voluntary fee disclosure program designed to capture the spirit of the rules driving 408(b)(2) and 404(a)(5) required disclosures for ERISA counterpart plans. As with any significant undertaking, it will take time to develop traction and wide-spread acceptance. But the process is underway and gaining momentum.
And last, but not least, the public-sector governmental 403(b) plan sponsors have yet another force to reckon with—the impact of public policy and state legislation. In an era where state defined benefit plans struggle with (in)adequate funding, the result has been a trend towards semi-privatization through defined contribution plan alternatives.
Understandably, state legislative initiatives that impact this market are at an all-time high. This backdrop of centralized, legislative decision-making imposed on a public market segment that has been accustomed to minimal regulation, is having a profound impact. With participant success at the forefront, the lively debate on the best ways to improve participant outcomes and to create more secure retirement futures will no doubt continue.
Meanwhile, practitioners continue to work through plan termination rules, grandfathered versus orphaned accounts, changes to Form 5500 reporting requirements, evolving IRS audit guidelines, fee disclosure, plan document compliance, transitional relief and field assistance bulletins. Product providers, third party administrators, lawyers, consultants, financial advisors and service providers of all stripes continue to find value—and create value—in a forum like this that encourages dialogue and seeks resolution to the obstacles that would otherwise inhibit adoption of best practices in all respects. Any independent practitioner in this market segment looking to build a resource library of materials and network with experts in the field would find this event invaluable.
Verity Asset Management
NTSAA member since 2000
Category: Member Focus