[Cobo] 403(b) Memo

[Paliotta, Amanda]

Oklahoma State Regents for Higher Education

 

 

 


MEMORANDUM


 

 

 

To:               Presidents Council

                        Council of Business Officers

 

From:                Amanda Paliotta

            

Date:                June 16, 2008

 

Re:                   403(b) Plans

 

________________________________________________________________________
______

 

As you know, a 403(b) Task Force was convened in March, 2008.  The Task
Force consisted of business officers from various institutions
representing all tiers of the State System.  The Task Force was convened
for the purpose of addressing issues raised by new federal 403(b)
regulations and by a proposed change in state law regarding 403(b)
vendors (the legislation regarding the proposed change was passed by the
Legislature in May and signed by the Governor in June).  

 

            The Task Force met several times, and was advised by
attorneys from the law firm of McAfee & Taft.  The Task force was moving
forward with a proposal that the State Regents (through a competitive
bidding process where appropriate) create a plan document, establish a
list of approved vendors, and provide for record-keeping and other
administrative services, and that the institutions then voluntarily
participate in this " master 403(b) plan" on a cost-sharing basis.  It
was the opinion of the Task Force that this proposal would allow the
State Regents and the institutions that chose to participate to obtain
efficiencies of scale, and better bids from potential vendors and
service providers, with respect to allowing their employees to
participate in 403(b) plans. 

 

            As details of the master 403(b) plan proposal were discussed
within the Task Force and presented to the State Regents, the general
issue of liability arose for the State Regents with respect to their
actions regarding the "Master Plan", and whether such actions would be
protected under the Oklahoma Governmental Tort Claims Act (OCTCA).  In
an effort to resolve these issues, a series of questions were submitted
to the Attorney General's Office.  In the advisory letter in response to
these questions, the Attorney General's Office states that the State
Regents do not have the authority to establish a master 403(b) plan, and
therefore, would not be protected by OGTCA.  For that reason, the master
403(b) plan proposal cannot go forward.  Each institution should consult
with their legal and human resource advisors to determine options that
will be available for your individual 403(b) plans.

 

The State Regents made a meaningful effort to try to provide a master
plan on an efficient and economical basis for institutions and their
employees.  We regret that we are not able to move forward because of
the potential for additional liability it might impose on the State
Regents.  The Task Force will continue to meet to discuss issues and
concerns that institutions may have as they implement the new IRS rules.


 

Please don't hesitate to contact me if you have any questions.

 

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