Adviser Explains Reason for Rejecting 403(b)

August 11, 2009 (PLANSPONSOR.com) - An investment adviser for a public access television station in Enid, Oklahoma, explains that costs were behind the decision to ditch a 403(b) plan for employees in favor of a SIMPLE IRA.

Robbie Bullis with Edward Jones investments told PLANSPONSOR "our local providers … were far too costly for PEGASYS' retirement plan budget." A local newspaper had reported that the change was recommended by an accountant who told the station's board that the 403(b) plan was no longer suitable for nonprofits (see Public Access TV Station Rejects 403(b) in Favor of SIMPLE IRA ).

Bullis cleared up that the decision was not based on the suitability for all nonprofits, but only for this particular situation.

Bullis explained that PEGASYS felt it needed to turn to a third party administrator to comply with new 403(b) regulations such as the new plan document requirement and additional recordkeeping rules, and the services could be costly. In addition, the plan provider offered through Edward Jones, 403b ASP, also charges participants an annual fee of $40 plus 10 basis points to maintain the account, he said.

"This was the deciding factor when we turned to the SIMPLE plan through the same mutual fund provider that we had been using for years," Bullis told PLANSPONSOR , explaining that the recommendation was jointly made by himself and the accounting firm hired by PEGASYS. The provider of the SIMPLE IRA plan charges an annual fee of $10 per participant and no recordkeeping/TPA fees.

The PEGASYS Web site says the station has five full-time and three part-time employees.

Rebecca Moore
editors@plansponsor.com