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Model 403(b) Plans
The scarcity of quality 403(b) plans nationwide has been well documented on this site.
But they do exist. We would like to take the opportunity here to spotlight quality 403(b) plans.
The plans listed here have the following in common: the employer made it a priority to offer both quality investment choices, and to ensure that
employees receive unbiased education.
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Employers who offer attractive plans recognize the necessity of the 403(b) for
both recruitment and retention. And even more importantly, they recognize and value their employees. We
hope the following list serves as a bench mark that all employers will strive to meet and even surpass.
K-12 Public Plans | College and University Plans
K-12 Public Schools
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Littleton
Public Schools (Littleton, Colorado)
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| Role of Plan |
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Supplemental plan. Primary retirement plan is the Public Employees'
Retirement Association of Colorado (PERA).
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| Eligibility |
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Plan is available to all employees.
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| Ability to Contribute |
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Upon employment.
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| Vesting |
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Immediate.
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| Vendor |
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TIAA-CREF.
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| Criteria for Vendor |
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Through the Request for Proposal (RFP) process district selected one
vendor — TIAA-CREF — for the following reasons: its investment philosophy and performance;
fees charged to participants on investments; investment portfolio offering the majority of major investment categories;
staff professionalism; knowledge and availability; reporting capabilities and timeliness thereof; ability to
customize reports; service capabilities including QDROS administration-educational seminars; one-on-one counseling;
voice response systems; on-line systems; customer service support, and hours of availability.
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| Employer Matching |
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2 percent match for 2003. 1 percent match for 2004.
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| Oversight |
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Provided by a district investment committee in coordination with an independent investment consultant. A
benefits attorney is employed as needed. Any recommendations for change are forwarded to Superintendent and his staff for approval to whom
authority for plan administration has been delegated by the Board of Education.
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| Education |
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Information provided at new employee orientations, and benefit open enrollment meetings. On-site individual one-on-one
counseling sessions on an appointment basis are provided by TIAA-CREF approximately 12-18 days throughout the school year. General
investment seminars are held 1-2 times per year; also individual appointments upon request. Individual portfolio reports are sent to participants
quarterly. The district investment committee provides an update on plan performance and other issues semi-annually to all participants.
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| Access to Other Plans |
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457(b) plan is available through TIAA-CREF, and a 401(k) is offered through PERA. Employees may
contribute to each of these plans.
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| Number of Participants |
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About 1,200 employees (out of approximately 2,300) contribute $6 million annually to the three
plans available — 403(b), 457(b), and 401(k).
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| Additional Notes |
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Littleton Public Schools moved to a single vendor for several reasons: 1) lower fees charged to our employees
resulting in higher investment earnings; 2) improved and consistent communication, education and service to employees; 3) district
and participant access to company representatives providing the assurance that funds are readily accessible at the appropriate
times (previously some were unable to locate the representatives that had sold them their investment product, and also had difficulty
locating their money); 4) consistent, concise reporting to both district and participants; 5) fiduciary liability —
district able to contract for specifically required services, and control the operations of the plans in order to ensure plan compliance; and
6) control in terms of accuracy of information provided to participants — also assurance that the investment product marketed meets the
participant's investment goals rather than a sales goal.
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Blue Valley Schools (Overland Park, Kansas)
A 1995 law workshop warning of increased IRS scrutiny led Assistant Superintendent Dr. Al Hanna to initiate an
audit of the Blue Valley Schools 403(b) plan. Aided by Aon Consulting and a committee of employees, the district
performed a thorough examination of its 403(b) plan. Among other recommendations, Aon suggested that Blue Valley Schools
reduce its number of vendors from 33 to a much smaller and more manageable number to help ensure compliance.
"The goal was not to have one type of company," said Dr. Hanna, who looked at fees, Morningstar ratings, and services offered in
choosing vendors. "We didn't want all agent-sold products or all no-load products. We wanted a mix." Employees can now choose
from both no-load and representative-sold offerings. The process took about a year and half and was not without some difficult
moments. At one point, Dr. Hanna asked himself: "Have I gone too far?" Superintendent Dr. David Benson
noted: "We had some angry employees who couldn't do business with their brother-in-law anymore." Dr. Hanna and Dr. Benson credit
the teacher representatives on the Employee Benefits Committee for urging the district to stay the course. "The teachers said this
is in the best interest of the employees," Dr. Hanna remarked. Dr. Benson is pleased that employees have quality choices, and the district
is in full compliance. He has this recommendation for other districts contemplating change: "It's critical that those doing this know what
is at risk. All contributions are at risk if a 403(b) plan is found out of compliance. You need to have good vision. You need to do the homework,
and you need to get your employees involved."
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| Role of Plan |
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Supplemental plan. Primary retirement plan is the Kansas Public Employee Retirement System (KPERS).
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| Eligibility |
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Plan is available to all regularly employed personnel who work 630 hours per year.
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| Ability to Contribute |
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Upon employment.
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| Vesting |
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Immediate for 403(b). Ten years for KPERS.
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| Vendors |
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American Century, MetLife, NEA Valuebuilders*, TIAA-CREF.
* 403(b)wise has serious reservations about the use of this product in its present form. It is our opinion
that if the National Education Association (NEA) is going to endorse a 403(b) product it should
make a conscious effort to align itself with a quality, low-fee product. This isn't. In fact one of the options
sports a 5.25% front-end load.
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| Criteria for Vendors |
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Wanted a manageable mix of no-load and agent based offerings.
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| Oversight |
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District has a 20-member Employee Benefits Committee made up of certified, classified and administrative
personnel. Five member sub-committee oversees 403(b) plan.
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| Education |
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Vendors provide information at annual "Benefit Bees."
Website provides
basic information along with vendor contact information.
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| Number of Participants |
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About 1,500 (out of 2,500) employees contribute almost $3 million per year.
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| Additional Notes |
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Blue Valley Schools will be considering adding a major no-load mutual fund company shortly. District
also makes available a 457(b) plan through the same vendors.
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We continue to seek model 403(b) plans in the following categories:
k-12 public, k-12 private, college and universities, hospitals, research institutes, and other 501(c)(3)
organizations. For criteria and how to submit a model 403(b) plan click here. |
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