Connecticut has passed a law that will bring non-Employee Retirement Income Security Act (ERISA) 403(b) plans closer to ERISA 403(b) plans. The law applies to Connecticut K-12 school districts.
Connecticut decided to pass the law after Connecticut teachers regretted investing in certain products without being informed of fees and other charges, according to a Hooker & Holcombe client alert. The new law requires the plans to disclose the fee ratio and returns, net of fees, for each investment offered to participants.
The new law went into effect October 1, 2017, but gives plan sponsors until January 1, 2019, to comply.
It also requires the plans to disclose any fees paid to an adviser, and provide applicable disclosures to participants when enrolling and again each year.
Hooker & Holcombe issued a checklist to help 403(b) plans follow ERISA best practices, starting with assigning either the school’s administration or an adviser to ensure vendors comply with the law and asking each vendor how they plan to comply with the law. The law firm says sponsors should also ask vendors for copies of draft disclosures they plan to supply participants upon enrollment and annually, and ensure that the information is in an easy-to-read format.