Date:
January 5, 2006
TO:
All Employees
FROM:
Tom Smith, Chief Financial Officer
Jennifer Seibert, Benefits Coordinator
RE:
403(b) Retirement Plan Administration & Compliance
Introduction of 457(b) Deferred Compensation Plan
Personal Financial Planning Services offered
Flex-Day Workshop, January 11, 2006
Many of you participate in a 403(b) Tax Sheltered Annuity or Custodial Account (“TSA/403(b) Plan”)
and/or our new 457(b) Deferred Compensation Plan (“DCP/457(b) Plan”) (“Plans”). We are pleased to
be able to offer the benefits of these voluntary pre-tax retirement programs, because we recognize that
many of you wish to defer current income taxes to your post-retirement years, while accumulating
additional savings for retirement.
Our new DCP/457(b) Plan, which is only available to governmental employees, will provide our
employees with new and expanded choices as you save and invest for retirement. Tax deferral is
important to many of us, and these Plans together provide you the ability to shelter more of your
income from taxes, as shown below. Further details about the enhanced 457(b) Deferred Compensation
Plan will follow.
Year
403(b)
457(b)
Total
2006 Basic Limit $15,000
$15,000
$30,000
Age 50+ Catch$5,000
up
$5,000
$10,000
$20,000
$40,000
Total $20,000
We are aware that the Internal Revenue Service is actively auditing TSA/403(b) and DCP/457(b) plans
sponsored by public school districts and county offices of education in California. As a result, many
plans have been reported as not being in compliance with federal, and in some situations, state statutes.
Improperly administered plans, and contributions being made in excess of eligible limits, can have an
adverse effect on both the employer and on you as a participant in the plan. For this reason, we are
undertaking steps to insure that the retirement plans sponsored by the District are being operated
correctly, for the benefit of the District and our employees.
To meet our administration and compliance responsibilities as Plan Sponsor and to expand the services
for the voluntary retirement plans sponsored by the District, we have contracted with Envoy Plan
Services, Inc. (“Envoy”) as our Third Party Administrator (“Administrator”) to assume responsibility
for all aspects of administering our Internal Revenue Code (“IRC”) Section 403(b) Plan and 457(b) Plan
(“Plans”).
The Administrator is establishing efficient and compliant administration for our Plans by implementing
new administration, compliance, and enrollment procedures, as outlined below. Envoy will be
implementing enhanced services and will provide technical resources for our employees, two of which
are designed to streamline the enrollment process and have your chosen investment provider receive
your salary reduction contributions sooner.
All current enrollment procedures and forms will be replaced using a new Enrollment Packet that
includes:
(i)
an explanation of the new enrollment procedures,
(ii)
important definitions with an IRS Maximum Allowable Contribution (“MAC”) limits table, and
(iii)
a newly updated Salary Reduction Agreement (“SRA”), which will be used to enroll in all of the
investment options provided in the TSA/403(b) and DCP/457(b) voluntary retirement plans.
Effective today, the new Enrollment Packet, including the new Salary Reduction Agreement, replaces
our current forms and procedures, which should be used immediately. The new Enrollment packet can
be obtained by contacting the Administrator directly using the information provided below, or by
logging onto the Administrator’s website at www.EnvoyPlanServices.com. Please do not contact the
payroll/benefits department for forms; we no longer have a supply.
Submission of Salary Reduction Agreements (“SRA’s”)
1.
2.
3.
4.
Beginning immediately all SRA’s are to be submitted directly to the Administrator for
processing which will affect the February 28, 2006 payroll and all future payroll periods. The
District will no longer be processing or accepting SRA’s.
A new Cut-off Date for submission of all SRA’s has been established, which is now the last
business day of the month.
It is important that you review the Enrollment Procedures document for all details relating
to SRA submission, and other enrollment procedures.
Please contact the Administrator directly if you have any questions.
We appreciate having the opportunity to provide our employees with a state-of-the-art administration
environment that ensures efficiency and compliance for both our employees and the District. We
encourage you to take advantage of the technical and educational resources being made available to you
by our Administrator, via their toll-free phone number, email, and the Internet. As the new
administration procedures unfold, you will receive additional information designed to assist you in
managing your participation in the voluntary retirement Plans. We appreciate your cooperation and
understanding during the implementation of these changes.