403(b) Third Party Administration Service
In July 2007, the Internal Revenue Service (IRS) issued regulations under Section 403(b) of the Internal Revenue Code. Effective January 1, 2009, these regulations greatly increased school districts' responsibility for administering a 403(b) plan, which includes creating and maintaining a written document stating all plan rules and reviewing each request by an employee for a distribution and/or loan from their investment.
Many districts determined that it is more cost-effective and less risky for these new duties to be outsourced. Region 10 Education Service Center conducted a Request for Proposal (RFP) process to select a vendor to perform these services for any district believing that a cooperative service will provide higher quality service and lower costs to district. JEM Resource Partners was selected as the contractor to provide the following services:
1. Provide the organizational and administrative structure of the program, including the following 403(b) TPA Services:
(a) Assist Employer to develop written 403(b) Plan rules
(b) Obtain agreements from vendors to comply with the Employer's Plan rules
(c) Screen new vendors for compliance
(d) Provide 403(b) Plan website and Plan database
(1) All Plan transactions requests from participants (enrollment, distributions, etc.) go through the TPA via a
website
(2) TPA monitors and implements compliance with Plan, IRS and State rules, including to the processes listed
below
i. Eligibility
ii. Enrollment
iii. Contributions
iv. Distributions
v. Loans
vi. Transfers and Rollovers
vii. Any other services mutually agreeable to the Employer, TPA and Region 10 ESC
(e) Transactions transmitted electronically to vendors
(f) Vendors process transactions and send electronic records to TPA
(g) TPA (not vendors alone) maintains records of transactions to facilitate Plan audits
(h) TPA website also used to educate employees on need for retirement savings
(i) TPA provides common remitter of all payroll deduction contributions to vendors and ensures that contributions to
employees' accounts are processed timely and in accordance with federal and state regulations
(j) TPA submits all employees' contributions received from Employer to all 403(b) vendors in a timely manner and in
accordance with applicable federal and state regulations
(k) TPA provides training for Employer staff and assists Employer in communicating aspects of the Plan to
employees
(l) TPA provides support for Employer in assuring that the Plan meets the "universal eligibility" requirements of
Section 403(b) of the Internal Revenue Code and other applicable federal rules as may be amended from
time to time
(m) TPA provides any other actions required by the final 403(b) regulations issued by the Internal Revenue Service
(n) TPA provides necessary reports to the Employer as needed and requested, including payroll and vendor account
reports, distribution/account transaction reports, reports of who is participating in the 403(b) Plan and any other
reports mutually agreeable to the Employer, the TPA and Region 10 ESC.
2. Provide staff time necessary for efficient operation of the program.
3. Initiate and implement activities related to the TPA vendor(s) selection process.
4. Region 10 ESC will ensure that a conflict of interest does not exist between the TPA's duties as defined, applicable
state law and the interests of the Employer and its employees. In particular, Region 10 ESC will ensure that the TPA
will not sell 403(b) voluntary products to employees of the Employer either directly or indirectly.
Contact:
Gordon Taylor, (972) 348-1004
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