Notices for Employees

IRS requirement: Remind your employees each year that they can save through your 403(b) plan.

Participation in 403(b) plans is a concern to the IRS. Their audits revealed that not all employees, particularly part-timers, are aware that they can save for their retirement through their employer’s 403(b) plan.

So the IRS’s new 403(b) regulations state that if one employee at a public school (which includes public primary and secondary schools, state colleges, state universities, and public junior colleges) has the opportunity to contribute at least $200 a year on a pre-tax basis, then the school must give all other eligible employees the opportunity to contribute to the 403(b) plan, subject to some very narrow exceptions. Employees who are eligible to participate in your 403(b) plan must be reminded each year that they can make pre-tax contributions and, if permitted, Roth 403(b) contributions, to the 403(b) plan.

To meet this requirement, you will need to review who is participating in your 403(b) plan currently. Take a look at your workforce to determine whether all of your employees who are eligible to contribute to the 403(b) plan have actually been given the opportunity to participate. This includes substitute teachers and part-time employees newly hired who are expected to work at least 1,000 hours in the upcoming 12 months as well as current part-timers with at least 1,000 hours of service in the past 12 months.

Remember that you cannot limit participation in your 403(b) plan to those employees who have reached a minimum age or completed a minimum amount of service.

As proof that your employees know about their opportunity to save for retirement through your 403(b) plan, you will be expected to send a notice every plan year to employees to make them aware of:

  • the opportunity to make or change deferrals to the 403(b) plan;
  • when they can make their deferral elections and any conditions that apply; and
  • the maximum amounts permitted.

ING U.S. solution: planwithease.com® notification services.

  • planwithease.com® can take on the notification requirement for you to reduce your paperwork and:
  • provide you with a notice to use with your newly-hired and newly-eligible employees about their ability to contribute to your 403(b) plan;
  • send annual notices to your eligible employees about the opportunity to contribute to the 403(b) plan; and
  • remind your participants about additional savings opportunities if they are eligible for catch-up contributions. 
C09-0626-073