403(b) Loan and Hardship Withdrawal Monitoring
Still River's Newest Offering
The new regulations require ongoing monitoring starting January 2009
In addition to making sure you have a written plan document and that certain other one-time administrative chores are accomplished by January, you also need to monitor 403(b) loans and hardship withdrawals on a regular basis. If a participant wants to take a new loan or hardship withdrawal, you have to authorize it before the vendor can execute the request.
If you have only one 403(b) vendor, that vendor can usually handle these requests, because it has all the information it needs. But if there is more than one vendor, none of them knows about activity in the othersí accounts, which is why the IRS is requiring that you, the plan sponsor, take responsibility. You have four options:
  1. Get rid of all vendors, except one. This is rarely the best choice, though, because different vendors have different strengths, and because you probably will anger people who currently do business with the vendors being dropped.
  2. Collect the information yourself from all the vendors, decode it, sort it out by participant, and perform the IRS-defined calculations for each participant.
  3. Hire a third-party administrator to do the job for you.
  4. Use Still Riverís monitoring software, and make this an easy task that you can do internally with little effort.
How the 403(b) Loan and Hardship Withdrawal Compliance Utility works
The hardest part (and it isnít very hard) is to contact each of your vendors for information about the data they will be providing for you. Once you have that, you can perform a simple set-up operation inside the Compliance Utility, so that it knows which vendors it should be expecting data from. (Note that, for this to work, your vendors need to follow the SPARK-NTSAA standard for this data. Most of the large vendors are already committed to doing this and are now getting ready to produce this data starting in January. Make sure your vendors are part of this effort, and if they arenít, insist that they get on board.)
Then on a regular (ideally monthly) basis, you receive the current data files from the vendors, start up the Compliance Utility, select the month and year the data pertains to, then CLICK THE BUTTON. Thatís all you have to do!
The Compliance Utility will automatically generate a ďcompliance reportĒ that lists any participants who appear to have excess loans or hardship withdrawals.
The second report from the Compliance Utility is an alphabetical list of all current participants and the vendors and accounts they have. This report tells you what the current available loan and withdrawal amounts are for each participant, so when you get a new request, all you have to do is look it up on the list to see if it is within the IRS limits.
If you follow this simple procedure regularly, your data will always be current and you will not have problems with loan and hardship withdrawal limits if the IRS audits you.
Advantages of the Compliance Utility
  1. You donít have to hire a third party administrator to do this job. You can save a lot by doing this yourself.
  2. There is a modest one-time cost.
  3. The utility is written in Microsoft Excel, so it is easy to use. You can add notes and comments right into the utility, and you can modify some aspects of the way the reports are printed.
  4. Updates will be provided at no extra charge up through the end of 2009. Since all of this is new, we have to expect that there will be some bumps and changes during the first year. As those turn up, we will adapt and send you a new version at no charge.
What it costs
There is a ONE-TIME charge for this software (no ongoing licensing or maintenance fees). The purchase price covers unlimited use on a single machine.
  • For PLAN SPONSORS with fewer than 100 participants: $450.
  • For PLAN SPONSORS with 100 or more participants: $950.
  • For CONSULTANTS and 403(b) FIELD REPS serving three or fewer plans: $950.
  • For TPAs serving more than three plans: $7,500.
  • For INSURANCE COMPANIES, MUTUAL FUND COMPANIES, and BROKER DEALERS who want versions they can distribute on an unlimited basis to their field reps and/or plan sponsors: plan sponsors: $17,000 ( $19,000 starting November 15).
To order the Compliance Utility, or obtain more information
Contact us at: info@StillRiverRetire.com
Sample compliance report

Still River Retirement Planning Software, Inc.
· 75 Broad St., Pittsfield, MA 01201
· Contact us by email: info@stillriverretire.com