School District of Brevard County Employee Tax Sheltered Annuities 403(b)/457(b) Savings Plans Update 1
Why Are Changes Required? IRS Tax Reform Completed July, 2007 Implementation Date for Tax Regulations: January 1, 2009 Prior to the new regulations, Investment Firms who provided tax sheltered products were required to ensure that their plans met the IRS requirements. Employers Were only Responsible to Ensure Plan Compliance. 2
Why Are Changes Required? Employer Responsibility Now Includes: Plan Administration/Plan Document Which Must Provide: 1. List of Vendors and Products under Plan; 2. Provisions for Employee Loans, Hardships, Transfers, Exchanges, Rollovers, Withdrawals; Determine Vendor Eligibility to the Plan Continuous Monitoring for Vendor Compliance 3
Why Are Changes Required? Employer Responsibility Now Includes: Providing Information Sharing between Vendors and Employer about Employees: 1. Transfers/Exchanges/Withdrawals/Loans 2. District Must Authorize all Transactions 3. District Must Maintain Information Data Bank for all Distributions/Transactions 4
Assistance from Independent Benefits Council (IBC) The IBC, Was Formed as a Non-Profit Organization to Assist Districts with Creating Manageable Employer Plans. IBC Represents: 1. Florida School Boards Association (FSBA) 2. Florida Association of District School Superintendents (FADSS) 3. Florida Association of School Administrators (FASA) 4. Florida Education Association (FEA) 5
IBC and the Model Plan IBC s Objective: 1. Provide a Plan for all 67 Districts to Provide Compliance and Management of the New IRS Regulations. 2. Reduce Number of Vendors, Ensure Access to High Quality Investment Products; Eliminate Inequities in Fees Throughout the State. 3. Utilize statewide purchasing power to negotiate the best possible combination of quality, service and pricing for employees throughout the state. 6
IBC and The Model Plan (cont.) IBC s Process 1. The IBC Selected Gallagher Benefit Services (through RFP Process) as their Independent Consultant to Develop the Characteristics of the Model Plan and to Create Criteria for Measuring the Qualifications of the Vendors. 2. Gallagher Was Assisted by TSA Consulting Group, Inc., Who Provides 403(b) Plan Administration Consulting for 64 of the 67 Florida School Districts. Services were provided gratis. 7
IBC and the Model Plan (cont.) IBC s Process On Oct. 18, 2007, the IBC issued an RFP to Investment Providers for Tax-Sheltered Annuity Plans. All 90 companies providing 403(b) Products in Florida School Districts were invited to participate; The RFP was also posted on an industry website known as Demand Star. 24 companies submitted 30 proposals for consideration in one or more of three service levels Annuities Multi Products Custodial Account Mutual Funds 8
IBC and the Model Plan (cont.) Proposals were narrowed down to 11 who were interviewed twice, at length. Eight plans made the final cut: 4 annuity, 2 mutual fund and 2 multi-product custodial plans were submitted to IBC in ranked order. On January 28, 2008, IBC reviewed the recommendations of the consultant and selected five plans for exclusive membership in the Model Plan. These five companies offer More than 600 different investment options 9
Brevard School District Implementation Timeline May 8, 2008: Board Update Providing Information About IBC and the Model Plan May 13, 2008: Board Information Item was submitted with staff recommendation to adopt the Model Plan. May 27,2008: Board Action Item with Submitted with Staff recommendation to adopt the Model Plan but also to send out RFP (based on Board Input at the Information Meeting) to current and local vendors with criteria that all vendors would be required to meet the IBC Model Plan criteria. June 13, 2008: RFP posted on Demand Star Website and emailed to contact names on file and local current vendors providing 403(b) products. 10
Brevard School District Implementation Timeline (cont.) July 2, 2008: Deadline for proposals; Five Responses were Received, One Response Did Not Meet General Conditions of the Bid and was Excluded. July 3-24: Proposal Review by Committee Members July 18, 2008: Proposal Review Meeting with Committee. Committee Requested to Review Model Plan Responses and Re-Convene on July 24. TSA Provided Guidance in Process. 11
Brevard School District Implementation Timeline (cont.) July 24, 2008: Selection Committee Members voted unanimously to reject all proposals and to use the IBC Model Plan exclusively as the District s choice. Reason: No Proposal Response to the RFP had Provided a Compelling Reason to be Added to the Model Plan. All products offered in the proposals were redundant to products already offered by Model Plan Vendors. 12
School District of Brevard County 403b RFP Committee Members Selection Committee: Representatives from BFT, 1010, BASA and District personnel were invited to participate. The following members were present on July 24, 2008 for the selection vote: Janet Eastman: President - Brevard Federation of Teachers Dr. Betsey Butler: Principal - Mila Elementary (BASA) Judy Preston: Associate Superintendent Finance Joy Salamone: Director - Labor Relations Susan Standley: Director Compensation & Benefits Charlene Neel: Manager Accounting Services Steve Banks: TSA Consulting Advisor (non voting) 13
School District of Brevard County Information/Education Timeline Week of August 18 22 Transition letters sent by TSA Consulting, to employees homes of current 403(b) contributors. August 18: Transition Letter sent to all Worksites, Providing information about IRS Tax changes; Requesting Visible Posting of Memo in Central Location for all employees. August 27: E-mail to all employees August 28: Notification of changes included in BPS Notebook August 29: Transition Letter sent to every employee with payroll distribution. 14
School District of Brevard County Information/Education (cont.) Question and Answer Sessions Have Been Scheduled at Various Work Sites Around the District Beginning September 29. (12 Sessions) Representatives of the Model Plan Vendors Are Invited to Set up Tables at Sessions for Employees to Ask Questions; Model Plan Provider Information Along With Representatives Names and Phone Numbers for Each Vendor Are Posted on BPS website to Assist Employees with Their Selections. FAQ and Answers for Employees Are Located on BPS Website 15
School District of Brevard County Information/Education (cont.) LOCATION CITY DATE TIME Bayside High Palm Bay Monday, 9/29/08 5:00 p.m. West Shore Jr./Sr. Melbourne Tuesday, 9/30/08 5:00 p.m. Educational Services Facility Viera Wednesday, 10/1/08 5:00 p.m. Central Area Transportation Cocoa Thursday, 10/2/08 9:45 a.m. Golfview Elementary Rockledge Thursday, 10/2/08 5:00 p.m. South Area Transportation Melbourne Monday, 10/6/08 9:30 a.m. Astronaut High Titusville Monday, 10/6/08 5:00 p.m. Apollo Elementary Titusville Tuesday, 10/7/08 5:00 p.m. North Area Transportation Titusville Wednesday, 10/8/08 9:30 a.m. Meadowlane Intermediate West Melbourne Wednesday, 10/8/08 5:00 p.m. Mid-South Transportation Melbourne Thursday, 10/9/08 10:00 a.m. Cocoa Beach Jr./Sr. Cocoa Beach Thursday, 10/9/08 5:00 p.m. 16
School District of Brevard County Approved Vendors 403(b)/457(b) 1. AIG Retirement, (VALIC) 2. 3. American Century Services, LLC. AXA Equitable Life Insurance Company 4. Plan Member Financial Corporation 5. Waddell and Reed, Inc. 17