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I'm the executive director of a very small non-profit in Virginia. This web site has been instrumental in convincing me we're doing a disservice to our employees (including me) by offering a 403b plan that prvides variable annuities as the exclusive investment vehicle.
I am determined to do better by my staff.
However, I cannot find step-by-step advice on how to get out of our current plan. If we cancel it, what happens to the money already in the plan? Can we merely transfer it to a new plan? Or do we have to park that money in the old plan and start a new one?
What are the basic costs involved in doing this? I have a good dea of where we want to go, but can we accomplish it without losing a sizeable chunk of our retirement investments? Do we have to just pull the plug and suck it up?
I need some step-by-step advice on how to do the right thing for my people by getting us out of this insurance company-based plan.
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How To Cancel An Entire 403b Plan Employer wants to get out of expensive variable annuity plan and provi
#2 Guest_Skeptical_*
Posted 31 January 2008 - 03:45 PM
RosslynED,
Do you have a single insurance company provider, or allow multiple vendors? In a single provider case the costs to surrender the contract and move are outlined in the contract. That said, there is a pending lawsuit in which the sponsor asked and was told the "exit" costs would be under $2000. When the sponsor pulled the trigger and moved to the new provider, $45,000 in "adjustment" charges were deducted from participant assets, resulting in, well, litigation. I think plan assets were about $1 million, so a 4.5% surrender charge.
Give us a little more info in possible. Describe your current retirement plan and the potential solution. I know many here will give feedback.
Best regards,
Jim
Do you have a single insurance company provider, or allow multiple vendors? In a single provider case the costs to surrender the contract and move are outlined in the contract. That said, there is a pending lawsuit in which the sponsor asked and was told the "exit" costs would be under $2000. When the sponsor pulled the trigger and moved to the new provider, $45,000 in "adjustment" charges were deducted from participant assets, resulting in, well, litigation. I think plan assets were about $1 million, so a 4.5% surrender charge.
Give us a little more info in possible. Describe your current retirement plan and the potential solution. I know many here will give feedback.
Best regards,
Jim
#3
Posted 31 January 2008 - 04:16 PM
Thanks for the quick reply, Jim.
Before I took over as Executive Director, our board had for the first time decided to sponsor a retirement plan for employees. I had come from the "real" world where I had always invested in 401k's, so I didn't comprehend the incredibly vast differences.
Ours is a tax-deferred variable annuity plan from Lincoln Life. This apparently was a very popular plan among small non-profits in the Washington, D.C. area when the organization got into it about 9 years ago.
Within the plan, we have about 20 fairly well-balanced funds to choose from, but I doubt anyone's ever heard of most of them.
I'm looking at the oriinal contract that I "inherited" and I honestly don't see anything in it about surrender fees or plan termination.
What's the caption of the lawsuit?????? (I'm a lawyer, but not one who's ever dealt with employee benefits)
RosslynED,
Do you have a single insurance company provider, or allow multiple vendors? In a single provider case the costs to surrender the contract and move are outlined in the contract. That said, there is a pending lawsuit in which the sponsor asked and was told the "exit" costs would be under $2000. When the sponsor pulled the trigger and moved to the new provider, $45,000 in "adjustment" charges were deducted from participant assets, resulting in, well, litigation. I think plan assets were about $1 million, so a 4.5% surrender charge.
Give us a little more info in possible. Describe your current retirement plan and the potential solution. I know many here will give feedback.
Best regards,
Jim
Before I took over as Executive Director, our board had for the first time decided to sponsor a retirement plan for employees. I had come from the "real" world where I had always invested in 401k's, so I didn't comprehend the incredibly vast differences.
Ours is a tax-deferred variable annuity plan from Lincoln Life. This apparently was a very popular plan among small non-profits in the Washington, D.C. area when the organization got into it about 9 years ago.
Within the plan, we have about 20 fairly well-balanced funds to choose from, but I doubt anyone's ever heard of most of them.
I'm looking at the oriinal contract that I "inherited" and I honestly don't see anything in it about surrender fees or plan termination.
What's the caption of the lawsuit?????? (I'm a lawyer, but not one who's ever dealt with employee benefits)
QUOTE(Skeptical @ Jan 31 2008, 03:45 PM) 
RosslynED,
Do you have a single insurance company provider, or allow multiple vendors? In a single provider case the costs to surrender the contract and move are outlined in the contract. That said, there is a pending lawsuit in which the sponsor asked and was told the "exit" costs would be under $2000. When the sponsor pulled the trigger and moved to the new provider, $45,000 in "adjustment" charges were deducted from participant assets, resulting in, well, litigation. I think plan assets were about $1 million, so a 4.5% surrender charge.
Give us a little more info in possible. Describe your current retirement plan and the potential solution. I know many here will give feedback.
Best regards,
Jim
#4 Guest_Skeptical_*
Posted 31 January 2008 - 04:37 PM
QUOTE(RosslynED @ Jan 31 2008, 03:16 PM)
Thanks for the quick reply, Jim.
Before I took over as Executive Director, our board had for the first time decided to sponsor a retirement plan for employees. I had come from the "real" world where I had always invested in 401k's, so I didn't comprehend the incredibly vast differences.
Ours is a tax-deferred variable annuity plan from Lincoln Life. This apparently was a very popular plan among small non-profits in the Washington, D.C. area when the organization got into it about 9 years ago.
Within the plan, we have about 20 fairly well-balanced funds to choose from, but I doubt anyone's ever heard of most of them.
I'm looking at the oriinal contract that I "inherited" and I honestly don't see anything in it about surrender fees or plan termination.
What's the caption of the lawsuit?????? (I'm a lawyer, but not one who's ever dealt with employee benefits)
Before I took over as Executive Director, our board had for the first time decided to sponsor a retirement plan for employees. I had come from the "real" world where I had always invested in 401k's, so I didn't comprehend the incredibly vast differences.
Ours is a tax-deferred variable annuity plan from Lincoln Life. This apparently was a very popular plan among small non-profits in the Washington, D.C. area when the organization got into it about 9 years ago.
Within the plan, we have about 20 fairly well-balanced funds to choose from, but I doubt anyone's ever heard of most of them.
I'm looking at the oriinal contract that I "inherited" and I honestly don't see anything in it about surrender fees or plan termination.
What's the caption of the lawsuit?????? (I'm a lawyer, but not one who's ever dealt with employee benefits)
RosslynED,
I'll look for the caption and post the link, as I just read the story in the last few days. Lincoln has several group variable annuity products. Is it the Multi-fund Suite, Director, Legacy? I can give you better answers with more detail. What platform are you considering?
Jim
#6
Posted 01 February 2008 - 01:07 AM
QUOTE(RosslynED @ Jan 31 2008, 12:53 PM)
I'm the executive director of a very small non-profit in Virginia. This web site has been instrumental in convincing me we're doing a disservice to our employees (including me) by offering a 403b plan that prvides variable annuities as the exclusive investment vehicle.
I am determined to do better by my staff.
However, I cannot find step-by-step advice on how to get out of our current plan. If we cancel it, what happens to the money already in the plan? Can we merely transfer it to a new plan? Or do we have to park that money in the old plan and start a new one?
What are the basic costs involved in doing this? I have a good dea of where we want to go, but can we accomplish it without losing a sizeable chunk of our retirement investments? Do we have to just pull the plug and suck it up?
I need some step-by-step advice on how to do the right thing for my people by getting us out of this insurance company-based plan.
If you want competent advice on terminating your relationship with a provider you need to go to benefitslink.com and scroll to the message board for retirement plans. There is a board under 403b plans where you can post your question and get competent advice from administrators, attorneys and professonal advisors who represent 403b plans. The posters on this board are mostly public school teachers who have no expertise in the regulatory and administrative requirements for 403b plans under ERISA or the IRC.
For example the case cited by Skeptical only apply to 403b plans subject to ERISA which will require analysis of who makes contributions to the plan. Plan termination (as distinguished from a change of providers) may be subject to IRS regulations. This board is not the proper forum to discuss such questions because the posters do not know enough to ask the right questions to assist inquiries such as yours.
#7 Guest_Skeptical_*
Posted 01 February 2008 - 09:16 AM
QUOTE(intruder @ Feb 1 2008, 12:07 AM)
There is a board under 403b plans where you can post your question and get competent advice from administrators, attorneys and professonal advisors who represent 403b plans.
RosselynED:
Of course the person who set up the plan likely depended on this same group of "usual suspects" to begin with. You can do better. If you are indeed terminating the 403b plan in order to establish some other vehicle, you should proceed only with unbiased counsel. Your original post implies that you wish to change providers, as you use the phrase " Can we merely transfer it to a new plan". That said, the point of the article and lawsuit were spot on. The plan sponsor asked BYSIS how much they would be charged to withdraw the balance of the plan from the investment vehicle. They were told $1,500 and then charged $45,000. You must be very careful when relying on the information provided by vendors. Best of luck.
Jim
#8
Posted 01 February 2008 - 10:19 AM
I appreciate all of this advice. I will also go to the other discussion board (benefitslink.com).
But as for being better off not using the expertise from you folks in the education business, I have found your discussions to be very helpful. Sounds to me like you all know a lot about this topic. Part of the problem is that benefits people speak another language which I've never learned. At least teachers are fairly good at explaining/communicating.
Any additional direction would be very helpful.
Thank you.
I'm the executive director of a very small non-profit in Virginia. This web site has been instrumental in convincing me we're doing a disservice to our employees (including me) by offering a 403b plan that prvides variable annuities as the exclusive investment vehicle.
I am determined to do better by my staff.
However, I cannot find step-by-step advice on how to get out of our current plan. If we cancel it, what happens to the money already in the plan? Can we merely transfer it to a new plan? Or do we have to park that money in the old plan and start a new one?
What are the basic costs involved in doing this? I have a good dea of where we want to go, but can we accomplish it without losing a sizeable chunk of our retirement investments? Do we have to just pull the plug and suck it up?
I need some step-by-step advice on how to do the right thing for my people by getting us out of this insurance company-based plan.
If you want competent advice on terminating your relationship with a provider you need to go to benefitslink.com and scroll to the message board for retirement plans. There is a board under 403b plans where you can post your question and get competent advice from administrators, attorneys and professonal advisors who represent 403b plans. The posters on this board are mostly public school teachers who have no expertise in the regulatory and administrative requirements for 403b plans under ERISA or the IRC.
For example the case cited by Skeptical only apply to 403b plans subject to ERISA which will require analysis of who makes contributions to the plan. Plan termination (as distinguished from a change of providers) may be subject to IRS regulations. This board is not the proper forum to discuss such questions because the posters do not know enough to ask the right questions to assist inquiries such as yours.
But as for being better off not using the expertise from you folks in the education business, I have found your discussions to be very helpful. Sounds to me like you all know a lot about this topic. Part of the problem is that benefits people speak another language which I've never learned. At least teachers are fairly good at explaining/communicating.
Any additional direction would be very helpful.
Thank you.
QUOTE(intruder @ Feb 1 2008, 01:07 AM)
QUOTE(RosslynED @ Jan 31 2008, 12:53 PM)
I'm the executive director of a very small non-profit in Virginia. This web site has been instrumental in convincing me we're doing a disservice to our employees (including me) by offering a 403b plan that prvides variable annuities as the exclusive investment vehicle.
I am determined to do better by my staff.
However, I cannot find step-by-step advice on how to get out of our current plan. If we cancel it, what happens to the money already in the plan? Can we merely transfer it to a new plan? Or do we have to park that money in the old plan and start a new one?
What are the basic costs involved in doing this? I have a good dea of where we want to go, but can we accomplish it without losing a sizeable chunk of our retirement investments? Do we have to just pull the plug and suck it up?
I need some step-by-step advice on how to do the right thing for my people by getting us out of this insurance company-based plan.
If you want competent advice on terminating your relationship with a provider you need to go to benefitslink.com and scroll to the message board for retirement plans. There is a board under 403b plans where you can post your question and get competent advice from administrators, attorneys and professonal advisors who represent 403b plans. The posters on this board are mostly public school teachers who have no expertise in the regulatory and administrative requirements for 403b plans under ERISA or the IRC.
For example the case cited by Skeptical only apply to 403b plans subject to ERISA which will require analysis of who makes contributions to the plan. Plan termination (as distinguished from a change of providers) may be subject to IRS regulations. This board is not the proper forum to discuss such questions because the posters do not know enough to ask the right questions to assist inquiries such as yours.
#9
Posted 01 February 2008 - 01:44 PM
Hi Rosslyn,
Thank you for your generous comments. Once in a while a benefits administrator comes to this site looking for answers. Since there are so few of you, I wish to express something about your post thanking us educators for our expertise. The expertise on this site is absolutely awesome because we have something that no money or technical know how can buy--PASSION. Very few pros can even come close to your ethical standards and merely think we know little or have nothing to give around here. Those pros are badly mistaken. We are in this for the long haul and NOTHING is going to stop us from providing the truth about these plans and looking out for the participants best interests.
You simple post thanking us for our expertise spoke volumes. I only wish we had more people who know the technical expertise such as you do and also recognize that what we have to offer on this site is pretty clear picture of the FUTURE. People better be listening to us because, like it or not, we are the costumers. The customer is always right. You can have all of the regulatory rules, regulations and the law on your side, but if the customer is getting the shaft, those regulations are doomed to change. Hearings in congress all year are the data that supports my view.
That’s what we are about around here and since you are incredibly wise to know the problems and issues at the customer end because you REALLY listened, I am confident that you will find a way around this messed up 403b system to have a genuine plan that truly looks out for the best interests of your participants. Your participants will never know how much you care for them and that’s OK, because you do and I think many of us here do too. I know I do.
Thank you for caring and best of luck,
Steve
Thank you for your generous comments. Once in a while a benefits administrator comes to this site looking for answers. Since there are so few of you, I wish to express something about your post thanking us educators for our expertise. The expertise on this site is absolutely awesome because we have something that no money or technical know how can buy--PASSION. Very few pros can even come close to your ethical standards and merely think we know little or have nothing to give around here. Those pros are badly mistaken. We are in this for the long haul and NOTHING is going to stop us from providing the truth about these plans and looking out for the participants best interests.
You simple post thanking us for our expertise spoke volumes. I only wish we had more people who know the technical expertise such as you do and also recognize that what we have to offer on this site is pretty clear picture of the FUTURE. People better be listening to us because, like it or not, we are the costumers. The customer is always right. You can have all of the regulatory rules, regulations and the law on your side, but if the customer is getting the shaft, those regulations are doomed to change. Hearings in congress all year are the data that supports my view.
That’s what we are about around here and since you are incredibly wise to know the problems and issues at the customer end because you REALLY listened, I am confident that you will find a way around this messed up 403b system to have a genuine plan that truly looks out for the best interests of your participants. Your participants will never know how much you care for them and that’s OK, because you do and I think many of us here do too. I know I do.
Thank you for caring and best of luck,
Steve
#10
Posted 01 February 2008 - 07:39 PM
Roslyn,
And as you can see, we have a very eloquent spokesman in Steve. His posts are hard to ignore.
Tony
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