The Tacoma School District has chosen CPI Qualified Plan Consultant Inc. to provide Common Remitter and Compliance Services for our 403(b) plan. With the finalization of the 403(b) regulations, the district felt it was important to out-source this work, to assist with keeping our plan in compliance with the ever-changing rules.
CPI will be assisting Tacoma School District No. 10 starting with the remittance of contributions to the investment vendors. They will also test limits and provide a compliance umbrella that ensures hardship withdrawals and transfers are made correctly, if allowed by the plan.
Right to make elective deferrals
You have the right to make elective deferrals to the 403(b) plan sponsored by your employer. If you wish to start making elective deferrals to a current vendor, contact the Payroll Office at 253.571.1236. (Note: It is possible there will be upcoming changes to the vendors approved to receive contributions and that some of the current vendors will be removed if they choose to not sign a new vendor agreement.)
In 2008, you can make elective deferrals up to $15,500. As this amount is subject to cost of living increases as set by the government, this amount will increase over time. In addition, if you have met certain conditions, you may have the opportunity to contribute above the deferral limit; these contributions are known as “catch-up contributions.” The first catch-up contribution is the “Age-50 Catch-up Contribution.” If you are at least age 50 by the end of a calendar year, you have the ability to contribute an additional $5,000 a year starting in that year. This amount is also subject to cost of living increases as set by the government, so it will increase over time. The second catch-up contribution is known as the “15 Years of Service Catch-up Contribution.” If you have at least 15 years of service with Tacoma School District No. 10, you may be eligible to contribute up to $3,000 a year above the deferral limit until the amount of the additional catch-up contributions made, using this special rule, equals $15,500. If you are eligible for both catch-up contributions, you may be eligible to contribute up to $8,000 a year above the deferral limit.
The Tacoma School District is in the process of determining which vendors will continue to be approved to receive contributions. Some vendors are choosing to no longer allow 403(b) contributions to be invested in their investment products, so the district does expect changes in the number of approved vendors. Once the determination is made, the district will provide you with a list of the approved vendors, the products they are providing and their contract information. The district will also notify employees who are contributing money to vendors who are no longer approved, so that new vendor elections can be made.
If your plan allows for hardship withdrawals, until CPI begins remitting contributions to the approved vendors, you should continue to obtain them directly from your vendor(s). However, once CPI starts remitting the contributions, to ensure that the requirements for hardship withdrawals are met, you will need to obtain a voucher from CPI prior to receiving a hardship withdrawal. The voucher can be obtained through the CPI Participant Web site at www.cpiqpc.com. If you do not have access to the Internet, you can contact the CPI Participant Service Center at 877.488.4040 or send an e-mail to Participant.ServiceCenter@cpicrs.com to obtain a paper copy of a voucher request. This voucher will need to be provided to your vendor(s) along with their standard forms. The voucher is needed as it lets your vendors know that you have met the regulatory requirements. The voucher does not guarantee that a hardship withdrawal can be made, as each vendor may apply additional restrictions, just that you have met the regulatory requirements to receive a hardship withdrawal.
Ability to transfer assets
Under existing rules, you generally have had the ability to transfer assets on a tax-free basis from your existing 403(b) plan accounts to other vendors within the 403(b) plan. However, with the issuance of the final 403(b) regulations, the Internal Revenue Service has imposed changes that may affect your ability to transfer assets.
After Sept. 24, 2007, a transfer from one vendor to another vendor within the same plan is only allowed if the vendor to which you wish to transfer assets has entered into or will enter into a written agreement with your employer by Jan. 1, 2009. This type of transfer is referred to as a contract exchange.
If you wish to do a contract exchange, you will need to obtain a voucher. Please contact the CPI Participant Service Center at 877.488.4040 or send an e-mail to Participant.ServiceCenter@cpicrs.com to find out if your employer has obtained a signed agreement with the vendor to which you wish to transfer assets and to also obtain a copy of the voucher request. If the vendor does not sign an agreement and you still choose to make a transfer, your transfer will fail to comply with the new requirements and cause the loss of the tax-qualified status of the money transferred to the vendor.
If your transfer is approved, you will be provided with a transfer voucher, which will need to be provided to the vendor along with the vendor’s transfer request forms.
It is important that you do not transfer any assets without first obtaining a voucher. Any transfer that is made that does not comply with the final regulations could cause the loss of the tax-qualified status of the money transferred to the vendor. If this happens, the money will become taxable to you.
If you have any questions concerning the ability to do a contract exchange, please contact the CPI Participant Service Center at 877.488.4040 or send an e-mail to Participant.ServiceCenter@cpicrs.com.
CPI participant Web site
Once CPI starts remitting contributions to the plan’s vendors, you will have access to your Participant Web site. Through this Web site, you will be able to enroll in the plan, make changes in the amount of your elective deferrals, make changes in your vendors and request vouchers for hardship withdrawals and transfers.
As soon as the district knows who the approved vendors are and start remitting contributions, we will provide you with the list of these vendors along with the information for accessing the CPI Participant Web site.