ASC Summer 2008 Newsletter

In this issue:

Watch ASC’s Defined Benefit PPA Update Video

This Defined Benefit PPA video provides a brief overview of the plan and employee specs that have been added to the system along with the location of the report pages that are now available. If you need more information on the progress of the programming for PPA, please review the document “DB_PPA Defined Benefit Documentation in process.pdf” in the User Documentation of the ASC website, and the cumulative readme file that accompanies the weekly patch. To view this video you must first login to the Client Support Center. If you encounter any problems logging into the Client Support Center, please email for assistance.

Offer your Plan Sponsors secure, customized website access at affordable prices

ASC’s web access, GEMINI, provides several advantages to you and your Plan Sponsors.

Secure Information

Gemini addresses increasing concerns about the security of information exchange. No more password protecting files. No more worries about email file size limits. It allows you to exchange documents with your Plan Sponsors in a secure environment, over a secure, encrypted website, without having to maintain your own encryption. ASC Case Plan Specification Screen

Increase your Efficiency

Clients can download plan specific reports as well as general forms over the web instead of contacting you. You can post plan documents, annual valuation or compliance testing results in a private folder. In addition, there is a “Public” folder where you can post generic census or participant forms for your clients to download at their convenience. From their side, they can then upload secure information such as signed forms or year-end census files for you to pick up. An email notification is sent to your designated email group when a file has been posted by your client. Though originally written as a piece of our Daily Valuation System, it is well suited for those users who need to exchange information with their clients in a quick, secure and efficient manner. All files are stored on your own server; not in a third-party location. ASC’s Plan Sponsor is simply the secure “portal” through which your files are exchanged from designated folders. Sample Internal Folder Structure Screen

Professional, Customized Website Access

ASC’s Plan Sponsor website is integrated with your business, customized with your logo, and linked from your website. Customization for individual Plan Sponsors is also possible. Plan Sponsor Website Sample Screen

Integrates with your ASC Valuation Case

Plan Sponsors may view general Plan information, such as eligibility and entry date provisions. In addition, it is tied to your ASC case, so they may view an “Employee List” or a “List of Eligible Employees” if you choose to make that available. Plan Parameters Screen

Easy & Affordable

It’s easy to set up – all you need is a standard internet connection and a dedicated workstation (XP or higher) that is connected to ASC to serve as the gateway. Each of your clients would have an individual login and would have access to only their own files. It is affordable with a customization setup fee of $1500 and maintenance of $75 per month. Contact us for your Demo login today.

ASC Welcomes Laura Houston!

In January of this year, ASC welcomed a new member to the Support Team, Laura Houston. You might have already had the pleasure of talking with Laura. Laura joins ASC with over a decade of experience in the retirement industry. She started trust reconciliation work and then continued on to full plan administration and compliance testing. She is not a newcomer to the field of support, having provided internal pension and ASC training in her previous positions. Laura has experience in both a traditional TPA office, as well as in an institutional setting where compliance testing is performed on ASC after linking data from another recordkeeper. “She’s a great addition to the team and we’re very enthusiastic about her. She has been able to come in and start answering support questions right away,” says Sheryl Stucky, Vice President of ASC Support. “I love the client interaction,” explains Laura. “Additionally, I’m always learning because ASC is continually updating the systems both in terms of keeping up with the changing legislation as well as adding new features.” In addition to her role as a Support Team Member, Laura is project managing ASC’s new Government Forms system, including 5500 forms. “Laura is a natural fit to be the designated ‘go-to’ person for 5500 forms because of her experience processing 5500 forms in her previous positions,” explains Sheryl. Laura earned her degree in Business Administration with a concentration in finance from East Carolina University. She has completed all exams for the QPA designation. Laura grew up in New Jersey and then relocated to North Carolina where she currently resides. She enjoys ballroom dancing, sewing and spending time with her mother, particularly shopping. Please join us in welcoming her to the ASC Team.  

New Rules Kicking in for 403(b) Plans – Plan Documents Needed This Year!

Plan Document Requirement

The new regulations require 403(b) plans to comply with the applicable requirements in both form and operation. This means that every 403(b) plan must have a written plan document. In the past, it has not been clear whether a 403(b) plan needed a written plan document. Now we know for sure. Under the new rules, the plan document must include all of the material provisions relating to eligibility, benefits, applicable limits, funding vehicles, the timing and form of benefit distribution and the minimum distribution requirements. The plan also must set forth certain optional features, such as the availability of in-service withdrawals, loans, transfers and rollovers. A 403(b) plan must take the form of a defined contribution plan, with individual accounts for the participants. The plan must also allocate the responsibilities for performing the administrative functions, including processing and approving withdrawals. The plan cannot assign responsibilities to the participants. While the regulations allow for a 403(b) plan to be comprised of multiple documents, at the very least, an “umbrella” document coordinating the multiple documents is appropriate. For ease of administration and to avoid conflicts between multiple documents, a comprehensive single document may be the best approach. The IRS has issued a “model plan” 403(b) document for use by public schools. The IRS states that the language in this model plan may be used by other 403(b) plans. However, the model document and its provisions will have limited usefulness because of the plan design features. Only very restrictive plan designs will fit onto the model.

Contribution Limits

Like 401(k) plans, 403(b) plans are subject to the 415 limit and the elective deferral limit. However, special rules do apply to 403(b) plans. The annual 415 limit ($46,000 for 2008) applies to all “annual additions” made to the plan on behalf of participants. Annual additions include employer contributions, matching contributions, pre-tax and after-tax employee contributions, Roth contributions and forfeitures allocated to a participant’s account. Rollovers do not count towards this limit. While all annual additions to all 403(b) plans maintained by the employer must be aggregated in determining whether a participant satisfies the 415 limit, annual additions to a 401(a) qualified plan maintained by the employer generally are not taken into account under the 403(b) plan. The elective deferral limit ($15,500 for 2008) applies to the pre-tax and Roth deferrals that a participant makes to a 403(b) plan. For this limit, deferrals made to a 401(k) plan are taken into account. In addition to the age-50 catch-up elective deferral contributions ($5,000 in 2008), some 403(b) plans allow a special catch-up elective deferral for employees of “qualified organizations.” Not all tax-exempt organizations fall within the definition of a qualified organization so not all 403(b) plans are allowed to incorporate this special catch-up allowance. A plan must specify whether it wishes to allow participants to make age-50 catch-up contributions and/or special catch-up contributions.

Controlled Group Rules

Since tax-exempt employers generally are not “owned” in a similar fashion as for-profit employers, the IRS provides special controlled group rules for tax-exempt organizations. Generally, employers are considered controlled if at least 80% of the directors or trustees of one organization are either representatives of, or directly or indirectly controlled by, the other organization. These rules will come into play in determining whether contributions are aggregated for certain purposes under the 403(b) plan.

Contributions for Former Employees

A special rule under 403(b) allows employers to continue to make contributions on behalf of a former employee. Under this rule, a former employee is deemed to have monthly compensation, based on his or her most recent period of service, for the five years after termination of employment. This does not allow a participant to continue to make elective deferrals into the plan, but does allow the employer to make contributions without violating the contribution limitations. A plan must specify that the employer intends to continue to make employer contributions on behalf of former employees.

Nondiscrimination Testing

As previously mentioned, 403(b) plans are exempt for the ADP nondiscrimination test applicable to elective deferrals made to a 401(k) plan. Thus, there is no restriction, up to the elective deferral limit ($15,500 in 2008), on elective deferrals that go into a 403(b) plan on behalf of highly compensated employees. However, a special universal availability rules applies to 403(b) plans. Under the universal availability rule, a 403(b) plan must permit all employees (with limited exclusions) to make elective deferrals if any eligible employee may make elective deferrals. This includes the right to make Roth contributions. This rule differs from the coverage rule applicable to 401(k) plans. Generally, church plans are exempt from the nondiscrimination and universal availability rules applicable to 403(b) plans.

Distribution requirements

The distribution requirements for a 403(b) plan differ slightly depending on whether the plan is funded with annuity contracts or custodial accounts. For all 403(b) plans, elective deferral accounts cannot be distributed until the earliest of: (1) severance from employment; (2) death; (3) a permissible hardship; (4) disability; or (5) the attainment of age 59 1/2. For a custodial account 403(b) plan, contributions other than elective deferrals can only be distributed upon severance of employment, death, disability and attainment of age 59 ½. These restrictions on the distribution of contributions other than elective deferrals do not apply to annuity contract 403(b) plans. Annuity contract 403(b) plans may distribute on the occurrence of any specified event. Whether a custodial account or annuity contract 403(b) plan, the plan must specify the permissible distribution events. Like 401(k) plans, 403(b) plans are subject to the minimum distribution rules that generally require that participants begin receiving distributions from the plan by April 1 following the year the participant attains age 70 ½ or retires, if later.

Plan termination

The regulations now clarify that an employer may terminate a 403(b) plan. Termination will allow for distribution of the plan’s assets without meeting any of the otherwise applicable distribution events. Upon distribution, a participant is able to rollover the 403(b) distribution to any eligible plan, including another 403(b) plan, a qualified plan or an IRA.

Contract Exchanges

The regulations set forth several rules applicable to contract exchanges and transfers between plans. Under new requirements, contract exchanges within a 403(b) plan are permitted provided the plan allows for such an exchange, no benefits are lost by the participant, the new 403(b) contract imposes the same distribution restrictions that applied under the prior contract, and the employer enters into an information sharing agreement with the issuer of the other contract under which the employer and the issuer will provide each other with certain compliance information.


The rules for 403(b) plans have become more complex and compliance more important. The IRS is likely to focus more efforts on ensuring that 403(b) plans meet their legal and regulatory requirements, which may include increasing 403(b) plan audits. There is discussion of the IRS starting a plan approval procedure similar to the one for prototype and volume submitter qualified plans. This would help ensure that the plan documents satisfy the plan documentation requirements. In the meantime, 403(b) plan sponsors and their advisors must now focus their attention on the new rules and try their best to comply. If you would like to license the ASCi 403(b) plan document, please go to or e-mail us at

ASCi EGTRRA Documents Available Now!

ASCi announces the IRS approval of their EGTRRA Volume Submitter and Prototype 401(k) documents for their ASCi Document Generation & Management (DGEM) System. “We’ve always had a vision of creating an automated document management system that would eliminate the time consuming hassles of word processing based document products, while simultaneously increasing the efficiency, profitability and organizational capabilities,” says Charles Lockwood, an ASCi principal and one of the drafters of the documents. “Now with the IRS approved EGTRRA documents on the system, many of our DGEM clients have already adopted or restated thousands of plans and are far ahead in restating their clients’ plans to comply with EGTRRA.” Through complete automation, the DGEM system allows administrators to quickly and easily create customized prototype/volume submitter plan documents, including profit sharing, 401(k), money purchase and defined benefit plans, while efficiently maintaining historical plan information, including plan amendments and pre-amendment document language. “In addition to the powerful stand-alone features of DGEM,” explains Alan Gould, President of ASC, “we are integrating DGEM with the ASC Valuation systems, eventually eliminating repetitive data entry that can cause costly and time-consuming discrepancies between the plan and its document. And we continue to develop more features with each release.” The integration roll out process began with enabling DGEM plan documents to be automatically populated from the plan specs on an ASC system. Over the next six months, ASCi will launch additional integration features. Written from the ground up using the latest Microsoft .NET technology, the DGEM system can be accessed as a true ASP or deployed in-house as needed. ASCi will continue to roll out other EGTRRA documents throughout the summer, allowing users to begin the restatement process immediately. These plans include profit sharing, money purchase, and traditional volume submitter (in appendix format) plan documents. Click here to see our DGEM video or contact us at Click here to learn more about the DGEM Plan Documents system.