403(b) Plans

403(b) retirement plans are easy to set up and administer.

403(b) plans are retirement plans for people employed by not for profit organizations. Offering a retirement plan is a good way to encourage employees to stay with your company and increase job satisfaction.

403 retirement plans are relatively simple to set up, and, once established, you can arrange for the financial services company to manage them. The process of establishing a 403(b) plan involves several simple steps.

1. The employer's governing board authorizes the creation of a 403 b retirement plan. It also agrees on an investment provider.

2. The human resources department or payroll department reviews the payroll process and makes sure that it has the technology necessary to allow for proper deductions and contributions.

3. Notify employees about the 403(b) plans. Strict rules ensure that your company follows non-discrimination rules.

4. Employees review the 403(b) information from investment providers and sign up.

Determine that your nonprofit is eligible for 403(b) retirement plans

403(b) plans can be established as retirement accounts for employees of public and private schools, colleges and universities, charities, religious groups and other non-profits.
IRS for eligibility requirements before setting up a 403(b) plan.

Understand the rules for 403(b) savings plans

403(b) plans, once established, are open to everyone in your organization. The term for this is universal availability. There are a few exceptions. Students, part-time employees, employees who have a collective bargaining agreement and non-resident aliens are all exceptions to the universal availability clause.

File the paperwork for your 403(b) accounts

403b plans do require extra work on the employers part, but properly managed, it is minimal. While some organizations choose to manage their employees retirement plans in-house, it makes more sense to allow the financial services company to handle this chore. This way, each employee can choose their investment vehicle, without putting addition pressure on the employer's payroll staff. The employer must also indicate on the employee's W-2 that the employee is participating in a 403b plan, the amount of deferral, and also check mark the box that states the employee is participating in a pension plan.

• Once you decide to establish a 403b retirement plan for your employees, determine if your organization will contribute to it, and if so, how much.
• Particularly for smaller non-profits with few employees, choose a financial planning services that will handle contributions and paperwork for you.
• Plan annual meetings to discuss 403b information with your employees. Ask a representative from your financial services company to visit to explain a 403 plan, the benefits, and the different investment vehicles available.

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