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

A: There are big advantages to churches and other employers that only offer MMBB plans. In this instance, MMBB will generally continue to have most, if not all, of the administrative responsibilities involving the MMBB plans. However, any employer that maintains other 403(b) arrangement(s) for its employees in addition to those offered by MMBB will have significant administrative and legal responsibilities to ensure that their employer-sponsored 403(b) plans are in compliance with the Regulations 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.

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 could result in immediate taxation of all contributions made to 403(b) plans by employees or by you on their behalf. Similar adverse tax consequences would result if a 403(b) plan is not maintained in accordance with the Regulations. This would create a significant financial burden for your minister and staff.

Q: My church maintains 403(b) arrangements in addition to MMBB’s plans. What additional responsibilities will we 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 their 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, this is a good opportunity to consider whether you want to continue to maintain more than one 403(b) vendor. As we stated above, one of the advantages of using MMBB as your sole 403(b) plan provider is that you can 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) arrangements that an employer maintains. The Regulations require that one entity must be charged with plan administration and coordination between the 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 referenced above specifically assigns such duties to a third party administrator (such as MMBB). Employers that maintain 403(b) arrangements in addition to MMBB’s plans are required to complete an Information Sharing Agreement, discussed below, with MMBB and all other vendors providing 403(b) retirement plan benefits.

Choosing MMBB as your sole 403(b) plan provider simplifies your responsibilities in this area, too. 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 rules that the Regulations impose:

Member Salary Reduction Contributions. The Regulations provide that Salary Reduction Contributions (member pre-tax contributions) to a 403(b) plan must be made within a period that is reasonable for the proper administration of the plan.  The final regulations suggest that contributions be remitted to MMBB no later than the 15^th day of the month following the month the invoice is intended to cover.  For example, if MMBB mails an invoice on February 1^st requesting the contributions due for the month of February. we recommend that the invoice be processed by the 15^th day of the following month (e.g., March 15).

Premium Payments. The Regulations provide that premiums to a 403(b) plan must be made within a period that is reasonable for the proper administration of the plan.  MMBB recommends that ALL 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, if MMBB mails an invoice on February 1^strequesting the premiums due for MMBB to provide coverage for the month of February, we recommend it be processed as soon as possible, but no later than the 15^th day of the following month (e.g., March 15).

Please note that these premium and contribution remission rules and procedures are subject to change according to applicable law and MMBB’s policies and procedures.

Q: What impact will there be if premiums are not received and processed by the 15th of the following month?

A: Failure of an employer to operate their 403(b) plan in accordance with the Regulations could result in immediate taxation of all contributions made to 403(b) plans by employees or by you on their behalf. This would create a significant financial burden for your minister and staff.

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

A: MMBB has provided you (or, upon your request, can provide you) with a kit of materials for you to review and complete.   You are required to complete the 403(b) Questionnaire and Adoption Agreement(s) for the plan(s) you sponsor and in which your staff participate.

Please contact MMBB directly for assistance in filling out the forms.

More detailed information to complete the Adoption Agreement follows below.

Q: Is there any other action my church or organization needs to take now to comply with MMBB policy?

A: The kit described above also contains a 403(b) Plan Questionnaire.  Completing this Questionnaire helps MMBB determine whether you maintain any non-MMBB 403(b) arrangements.

You can complete the Questionnaire you received in the kit and return it to MMBB in the envelope provided.  You can also complete the Questionnaire online through the “403(b) Retirement Plan Compliance Center” on our website, www.mmbb.org.

We will record the information you provide and work with you to determine in which plans you and your members actively participate or have an account balance.

Q: What is an Adoption Agreement and what purpose does it serve?

A: The Adoption Agreement is a written document signed by an employer that establishes eligibility rules and premium levels that the employer selects for their employees in accordance with the provisions of a 403(b) retirement plan.  Each MMBB plan, the Retirement Plan, the Tax Deferred Annuity plan and The Annuity Supplement plan, requires its own Adoption Agreement.

Please complete and sign each Adoption Agreement, make a copy for your records, and mail the original back to MMBB in the envelope provided.  If the employer is a church, the Adoption Agreement must be signed by the church treasurer or other authorized officer.  An employee of the church (i.e. the pastor or church administrator) cannot sign the Adoption Agreement.

Q: Under what circumstances can an employee of the employer sign an Adoption Agreement?

A: If the employer is a non-Qualified Church Controlled Organization (non-QCCO), that is an organization like a university or hospital, or the organization is a pension board or other national board of a denomination, an employee can complete the Adoption Agreement.  If you are not certain if your organization is a non-QCCO, please contact MMBB directly.

Q: I am a Wandering Minister. Am I required to complete the Adoption Agreement(s)?

A: Yes, as a Wandering Minister you are considered both the employer and employee. Therefore you must complete the Adopting Employer information section of the Adoption Agreement. Use your name as the Adopting Employer and the billing address for your monthly invoice as the address of the Adopting Employer.  Please refer to the frequently Asked Questions for Wandering Ministers section.

Q: Why are there two possible responses in the Participation Section?

A: Most employers will check off the first circle stating they are currently providing benefits under the Plan.  Employers who choose to stop contributing to a plan but whose employees have remaining balances in their accounts, are still required to complete the Adoption Agreement and remain responsible to monitor these accounts.

Q: What are the eligibility rules that the employer selects in the Adoption Agreement?

A: The plan eligibility rules govern which employees are permitted to participate in the plan.  Generally, any employee of a church or Qualified Church Controlled Organization can participate in any of the plans sponsored by MMBB.  Churches also have the ability to reserve eligibility to certain classifications of employees, such as clergy only, full time employees only, etc.

A non-Qualified Church Controlled Organization, such as a university or hospital, has certain IRS-imposed non-discrimination rules that govern employee eligibility in the plan(s).  If you are a non-QCCO, please contact MMBB directly so we can assist you in completing the Adoption Agreements.

Q: May an employer select to enroll part-time employees under the Adoption Agreement?

A: Yes.  The MMBB retirement plans do not impose any restrictions on eligibility to participate based upon employment status.  The Adoption Agreement has a section specific to plan eligibility.  The employer would check off the circle that states “The Adopting Employer elects to use the eligibility rules set forth in Section 3.01 of the Plan”.  Consequently, all employees are eligible to participate in the plan.

The plans do provide flexibility for the employer to impose such a restriction if they so choose.  Under the eligibility section of the Adoption Agreement, the employer would indicate their election to limit participation in the plan and specify those limitations.

Q: If enrollment of part-time employees is allowed, would it be limited to TDA and TAS?

A: No.  If so elected by the employer, part-time employees may participate in the Retirement Plan, Tax Deferred Annuity plan and The Annuity Supplement plan.

Q: What are the premium levels that the employer selects in the Adoption Agreement?

A: There are differences between premium elections for each MMBB plan; the Retirement Plan (RP, the retirement leg of the Benefits for Life program), the Tax Deferred Annuity plan (TDA) and The Annuity Supplement plan (TAS). 

The RP premium amount should include the entire Benefits for Life (BFL) premium.  This covers the RP contribution as well as the death and disability coverage provided by MMBB.

Under TDA, the employer chooses the contribution amount.  If the contribution amount varies by employee, please note that on the TDA Adoption Agreement.

The TAS Adoption Agreement does not contain an area to specify the premium (contribution) amount.  This is because the employee chooses how much to contribute.  The employee and employer must execute a Salary Reduction Agreement (MMBB Form A-13a) before any contributions may be made.  The percentage of compensation or dollar amount to be contributed will be indicated on the Salary Reduction Agreement.

Q: What does the Vesting section of the Tax Deferred Annuity plan on the Adoption Agreement represent?

A: Vesting is the term used to determine the ownership a plan member has in their employer provided account.  Members who are employees of churches or QCCOs tend to have 100% ownership rights in their accounts immediately, i.e. they are 100% vested.  Some non-QCCOs, e.g. universities and hospitals, may elect to have a waiting period before full vesting occurs.

The default vesting schedule on the TDA Adoption Agreement is 100%.  If you want to use one of the alternate vesting schedules provided, fill in the appropriate vesting schedule and submit to MMBB.

Q: What should an employer do if the Adoption Agreements have not been provided?

A: If you have not received your Adoption Agreement(s), e-mail us at 403bregs@mmbb.org and provide either an e-mail address or church mailing address.  You can also call a member service representative at 1.800.986.6222 to request your Adoption Agreement(s).  Providing an e-mail address to our member service representative will expedite the process and make future communication easier.

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 in order to simplify the administrative burden, you may want to encourage your employees to transfer their retirement savings from other 403(b) plans to MMBB in a “plan-to-plan transfer.”

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

MMBB will 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. 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 transfers out of the plan.  You will want to verify whether the non-MMBB plans allow for plan-to-plan transfers out of such plans and what type of participant consent is required. You should also determine what fees, if any, are imposed on balances that are transferred out of the non-MMBB 403(b) arrangement(s).  Some contracts impose high termination fees that make transfers an unwise investment decision.

A plan-to-plan transfer requires that an Information Sharing Agreement be entered into between the employer (you), the vendor of that employer and MMBB.  This ensures MMBB receives all account history required to administer the transferred account.  MMBB will assist you in this process.

If your employee chooses to transfer funds to MMBB (and is able to under the Regulations and the applicable 403(b) arrangement), it just involves completing a Plan-to-Plan request form and submitting it to MMBB.  Please contact MMBB directly for assistance completing this form and moving the assets to MMBB.

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

Q: What if my church/organization is participating in multiple 403(b) arrangements?

A: Because of the complexities associated with offering multiple arrangements with different vendors, now is a good opportunity 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 your administrative responsibilities and simplifies the administrative process associated with ensuring compliance with the Regulations.  If your church continues to participate in multiple plans, you must complete an Information Sharing Agreement and return it to MMBB.  An explanation of the agreement is found below.

Q: What are Information Sharing Agreements and under what criteria am I to retain Information Sharing Agreements?

A: An Information Sharing Agreement is required if you or your employee(s) use multiple vendors to provide 403(b) retirement plan contracts.  An Information Sharing Agreement assures that all of your 403(b) plan vendors supply you with the data you need to determine whether a severance from employment has occurred, whether hardship withdrawal rules have been satisfied and whether a loan meets applicable requirements.  An Information Sharing Agreement should be completed between yourself and all other organizations or institutions providing 403(b) contracts to ensure compliance with the applicable requirements.

Q: If I want to make MMBB my sole provider of 403(b) plans in order to reduce my administrative responsibilities, what do I need to do?

A: 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.

In order to initiate this process, your employees will need to initiate a plan-to-plan transfer.  This requires an Information Sharing Agreement to ensure MMBB receives all account history required to administer the transferred account.

MMBB has template Information Sharing Agreements and will provide them to you upon your request.

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 a full review of the Regulations is beyond the scope of 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 notifying new employees and reminding all other employees annually.  While most churches are exempt from this universal availability rule, if you are a church-affiliated college, nursing home or hospital or otherwise 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, as applicable.

Further guidance from the IRS is anticipated to clarify issues around the controlled group rules, nondiscrimination testing and plan corrections in the event of a plan error.  MMBB will share such clarification when it is provided.

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

A: Please feel free to contact a member service representative at 800.986.6222 or send an email to 403bregs@mmbb.org.