Q: What is the effect of these Regulations on employers who participate in the MMBB 403(b) plans?

A: For employers whose only 403(b) plan offering to employees is the MMBB 403(b) plans (i.e., the employer does not maintain any other 403(b) arrangements for its employees), MMBB will generally continue to have most, if not all, of the administrative responsibilities involving the MMBB plans.  However, any employer that, in addition to participating in MMBB’s plans, also maintains any other 403(b) arrangement(s) for its employees, the employer will have significant administrative and legal responsibilities to ensure that their employer-sponsored 403(b) plans are in compliance with the Regulations (see the Q/A 2 below for an example of such responsibilities) and other applicable law.  This means there will be increased employer duties concerning plan “form” i.e., plan documentation, and “function” i.e., administrative activities.

In the past, regardless of how many other non-MMBB 403(b) plans an employer offered to its employees, the employer’s role had been generally limited, from a practical viewpoint, to assisting employees in completing Membership Application forms and remitting monthly premiums.  Under the Regulations, the employer’s role is greatly expanded if it provides for 403(b) arrangements outside of the MMBB 403(b) plans.

Employers who join the MMBB plans as their sole 403(b) retirement plan can allocate most of these administrative duties to MMBB.

Q: For employers that maintain 403(b) arrangements in addition to MMBB’s plans, what major responsibilities will they have under these Regulations?

A: Employers that maintain any non-MMBB 403(b) arrangements for their employees will have the following responsibilities under the Regulations:

• Establish and maintain a written plan document encompassing all 403(b) plans offered and vendors maintained by the employer. The Regulations require that all 403(b) arrangements have a legally compliant plan document.  The plan document must include provisions including, but not limited to, plan eligibility, forms and timing of distributions, nondiscrimination testing (if applicable), loan availability and contribution limits.  Employers that use MMBB as their sole 403(b) plan provider will be able to adopt the plans provided by MMBB to fulfill this requirement.   However, an employer that maintains multiple 403(b) arrangements will need to have its own plan document(s) that reflects all plans and vendors.  A 403(b) plan document is a legal document that is subject to complex technical rules. If you maintain multiple 403(b) arrangements, you will want to contact your attorneys and/or 403(b) plan vendors for assistance with this process.  Because of the complexities and expense associated with maintaining your own plan document, now would be a good time to consider whether you want to continue to maintain more than one 403(b) vendor.  Employers that use MMBB as their sole 403(b) plan provider will be able to adopt the MMBB plan document to fulfill this plan document requirement.
  
  
• Monitor employee and employer contributions/salary deferrals, loans, hardships and other legal requirements to ensure they do not exceed IRS maximums or violate applicable law. It is necessary to keep track of all of an employee’s 403(b) plan transactions on an aggregate basis across all 403(b) plans that an employer maintains.  The Regulations require that one entity must be charged with plan administration and coordination between multiple 403(b) arrangements. If you as the employer maintain both the MMBB plan along with other 403(b) plans, it is your  responsibility to monitor and administer these limits across all 403(b) arrangements, unless the written plan document specifically assigns such duties to a third party administrator.
  
  If you choose to use MMBB as your sole 403(b) plan provider, MMBB will monitor items such as employee and employer contributions, loans, hardships and other legal requirements to ensure compliance with applicable legal limits and rules.

Q: What are some other important rules that the Regulations impose on churches?

A: While the full scope of the Regulations is beyond these Frequently Asked Questions, we would like you to be aware of the following new rule that the Regulations impose:

• Premium Payments.The Regulations provide that contributions to a 403(b) plan must be made within a period that is reasonable for the proper administration of the plan.  Using the Regulations as a guide and understanding  the process MMBB follows to invoice and process on-going premiums (and contributions), we are recommending to each of our employers that premiums be remitted to MMBB so that they are  received by us no later than the 15^th day of the month following the month the invoice is intended to cover.  For example, MMBB mails an invoice on February 1^st requesting the premiums due for MMBB to provide coverage for the month of February.  We recommend each invoice be processed as soon as possible thereafter but no later than the 15^th day of the following month (e.g., March 15).  Please note that these premium remission rules and procedures are subject to change according to applicable law and MMBB’s policies and procedures.

Q: What is the penalty for noncompliance with the Regulations?

A: Failure of an employer to have a legally compliant 403(b) plan document in place by January 1, 2009, could result in immediate taxation on employees of all contributions to the 403(b) arrangements made on their behalf.  Similar adverse tax consequences would result if a 403(b) plan is not maintained in accordance with the on-going administrative requirements prescribed by the Regulations.

Q: What action does my church/organization need to take now to comply with the Regulations?

A: To assist in determining your role in complying with the Regulations, we request that you complete the 403(b) Plan Questionnaire as soon as possible.  This will help you and MMBB in confirming whether you maintain any non-MMBB 403(b) arrangements.

If your church/organization is participating in multiple 403(b) arrangements, you should decide whether you want to continue offering such multiple 403(b) options after January 1, 2009.  Because of the complexities associated with offering multiple arrangements with different vendors, now would be a good time to consider whether you want to continue to maintain more than one 403(b) vendor.  Having a single 403(b) vendor like MMBB removes many of the administrative responsibilities on the employer and simplifies the administrative process associated with ensuring compliance with the Regulations.

Q: If we cease making contributions to other non-MMBB 403(b) plans, what options do our employees have regarding those accounts? Can those accounts be transferred to MMBB?

A: If you decide to make MMBB your sole 403(b) vendor going forward, employees can choose to leave the funds with the prior vendor(s), they may be able to transfer funds to MMBB in a “plan-to-plan transfer” or they may have other options depending on the terms and conditions of the specific 403(b) arrangement.

A “plan-to-plan transfer” is a tax-free direct transfer between one 403(b) plan maintained by the employer and the one maintained by MMBB.  It is not considered a distribution and no IRS Form 1099-R is provided to the employee.  Plan-to-plan transfers are subject to specific rules and requirements under the Regulations.

MMBB is happy to accept your employees’ existing accounts from other 403(b) arrangements in a plan-to-plan transfer according to the rules set forth in the Regulations. However, your employees’ request for a plan-to-plan transfer can only be granted if the plan that he or she is transferring out of permits these types of transfers out of that plan.  You will want to verify whether the non-MMBB plans allow for plan-to-plan transfers and what type of participant consent is required, and what fees, if any, are imposed on balances that are transferred out of non-MMBB 403(b) plans.

Some contracts impose high termination fees that make transfers an unwise investment decision.

If the employees choose to leave the funds with the prior vendor, you as the employer are responsible for the administrative activities such as certifying loan and withdrawal requests as well as minimum distribution requirements.

If your employee chooses to transfer funds to MMBB (and is able to under the Regulations and the applicable 403(b) arrangement), it is as easy as completing a Plan-to-Plan request form and submitting it to MMBB.  Your regional representative can assist you in completing this form and moving the assets to MMBB.

Q: If I still have questions regarding the Regulations, how can I contact MMBB?

A: There are several options for contacting us.  Your regional representative is very knowledgeable about the Regulations and will be able to answer any questions you may have.  Another option is to contact a member service representative (MSR) in our New York office.  The telephone number for New York is 800.986.6222.  We have also established a dedicated email address to answer any questions regarding the Regulations.  The email address is 403bregs@mmbb.org

Our Web site, www.mmbb.org, will also be updated throughout the remainder of the year with new information, webinar and teleconference opportunities.

Q: Are there any additional rules in the new Regulations that would pertain to non-Qualified Church Controlled Organizations, e.g., a church-affiliated college, nursing home or hospital?

A: While the full scope of the Regulations is beyond these Frequently Asked Questions, we would like you to be aware of the following new rule that the Regulations impose:

• Universal Availability.  The Regulations require that 403(b) plans that offer elective deferrals, such as those offered under The Annuity Supplement (TAS), meet a “universal availability rule.”  The universal availability rule means that if any employee  is permitted to make elective deferrals to the 403(b) plan, then all employees must be permitted to do so (subject to some limited exceptions).  In order to meet this requirement, employees must be given an effective opportunity to make or modify an election to make elective deferrals. This requires notification to new employees and annual reminder notifications to all other employees.  While most churches are exempt from this universal availability rule, church-affiliated colleges, nursing homes, hospitals or other institutions are subject to the IRS non-discrimination regulations, you must ensure that all employees are made aware of their ability to participate in the MMBB TAS.

Q: I participate in the Retirement Plan offered by MMBB and also have a personal retirement account outside of my employment. Is there any action required on my part?

A: Generally, no.  The Regulations specifically address 403(b) arrangements.  If you maintain an IRA, Roth IRA, or 457(b) plan, for example, there is no action needed on your part for purposes of the Regulations.

If you are self-employed, you should notify MMBB of any other 403(b) retirement account in which you participate.

Q: I am a bivocational minister who participates in MMBB’s 403(b) plans. What is my and my employer’s responsibility under these Regulations with respect to meeting plan and legal limits and coordinating loans and hardship withdrawals?

A: As discussed above, it will be necessary to monitor and coordinate all of your 403(b) plan transactions (e.g., contributions, plan loans and hardship distributions) across all of the employer’s 403(b) arrangements on an aggregate basis, including the MMBB plans.  Elective deferrals to any other type of tax-qualified retirement plan maintained by the employer, such as a 401(k) plan, profit-sharing plan or money purchase plan, will also have to be aggregated with the 403(b) plans for elective deferral limits, as applicable.  The “employer” for these purposes is determined on a “controlled group” basis. This means that any plans maintained by entities under common control with the direct employer will also have to be aggregated for purposes of coordinating legal limits and certain requirements.  If you are participating in more than one plan as outlined above, please contact us at 403bregs@mmbb.org for a complete explanation of the control group rules and how they may affect your plans.

Q: I am a Wandering Minister who participates in MMBB’s 403(b) plans. What are my responsibilities under the Regulations?

A: It would appear that because you participate in the MMBB plans through your ministry, you should be treated as the “employer” in this type of situation for purposes of the Regulations.  If MMBB is your sole retirement plan provider, the only action you need to take at this time is to complete the 403(b) Plan Questionnaire and return it to MMBB.

If you are participating in more than one 403(b) retirement arrangement (i.e., in addition to the MMBB plans), you will have to monitor your activities over all plans to ensure you are not violating any IRS limits.

Because of the complexities associated with participating in multiple 403(b) arrangements with different vendors, now would be a good time to consider whether you want to continue participating in multiple 403(b) arrangements.  Having a single 403(b) vendor like MMBB removes many of the administrative responsibilities on you as the “employer” and simplifies that administrative process associated with ensuring compliance with the Regulations.

Depending on the type of 403(b) accounts you maintain outside of MMBB, you may be able to complete a plan-to-plan transfer to consolidate all of your 403(b) retirement accounts at MMBB, which would greatly reduce your administrative responsibilities. Please read Q/A #6 above discussing plan-to-plan transfers for more information.  Your MMBB regional representative or a member service representative in our New York office can assist you in completing the necessary form.

Q: I am no longer actively participating in the retirement plans offered by MMBB but have an account remaining with MMBB (e.g., because my employer no longer offers MMBB as 403(b) vendor, my employer is no longer in existence, I am a former employee or I have an MMBB account as a beneficiary or as the result of a Qualified Domestic Relations Order (QDRO). Do the coordination requirements of the Regulations apply to my account(s)?

A: Although the rules are complicated with respect to non-active accounts depending on when the accounts became inactive, it will generally be advisable for your employer to monitor and coordinate all of your 403(b) plan transactions (e.g., contributions, plan loans and hardship distributions) across all of the employer’s 403(b) arrangements on an aggregate basis, even for non-active accounts.  If your employer is no longer in existence, MMBB may take on some of the administrative responsibilities for these purposes.

Q: If I still have questions regarding the Regulations, how can I contact MMBB?

A: There are several options for contacting us.  Your regional representative is very knowledgeable about the Regulations and will be able to answer any questions you may have.  Another option is to contact a member service representative (MSR) in our New York office.  The telephone number for New York is 800.986.6222.  We have also established a dedicated email address to answer any questions regarding the Regulations.  The email address is 403bregs@mmbb.org

Our Web site, www.mmbb.org, will also be updated throughout the remainder of the year with new information, webinar and teleconference opportunities.