Ralph Sanna, Director-Strategic Initiatives, TIAA-CREF, said a main goal of the newest version (1.04) of “Best Practices for 403(b) and Related Retirement Plans Information Sharing – Minimum and Comprehensive Data Elements”, effective 1/1/10 (see SPARK Issues New 403(b) Info Sharing Best Practices for 2010), is to provide comprehensive definitions for all distribution types and reasons. The document formerly only focused on loans and hardships and did not have ability to provide for more than one hardship distribution, Sanna noted.
But, while the newest version allows for providing information on all distribution types, distribution reasons are now limited to only hardships since hardship approval is the only time the reasons are relevant.
Changes to Part IV of the best practices:
- Specified requirement for Rolling 12 months of data for Part IV distributions;
- Identified transactions not to be included in Part IV;
- Added Distribution Types and classifications of existing transaction types; and
- Provided additional specifications for Distribution
In addition, The SPARK Institute’s online Q&A has been updated with plan distribution-related items, addressing:
- Reporting Total Hardship Amount Available (Q&A 66)
- Maximum Loan Amount Eligible-Vendor (Q&A 67)
- In-Service Withdrawals (Q&A 68)
- 403(b) Plan to Plan Transfers (Q&A 69)
- HEART Act Distributions (Q&A 70)
- Loan Status Definitions (Q&As 71-73)
The newest Best Practices document also modifies the standard for usage with other plan types, such as 457s, according to Sanna.
Form 5500 Guidelines
James Racine, AVP, 403(b) Initiatives, Lincoln Financial Group, spoke on the recently released guidelines on Form 5500 Aggregation for multiple vendor ERISA-covered 403(b) plans (see SPARK Releases Form 5500 Guidelines for 403(b)s). He said the guidelines provide a standard industry definition for roles and responsibilities and an efficient approach for sharing data sharing. There are two sections of the guidelines – one addressing data aggregation and the other addressing delivery and audit support.
According to Racine, when developing the Form 5500 guidelines, the Institute anticipated the DoL e-File format, but since it was released by the DoL so late in the year, a file format from SPARK was not included in the guidelines. The guidelines will serve as a framework for developing best practices and a file format, which SPARK plans to do this year.
Larry H. Goldbrum, General Counsel, The SPARK Institute, said there is no timeline in place for the Form 5500 best practices, but the Institute’s goal is to have it in place before the deadline for 2010 plan year reporting.
SPARK Asks for Feedback
Other SPARK Institute initiatives for 2010 include:
- Creation of an XML version of the Information Sharing Best Practices;
- A forum for sponsors on "Staying Compliant with Vendors Not Following the Data Elements Best Practices;" and
- Evaluation of the Need for New Releases.
Goldbrum added that the Institute has completed the process of cleaning up its Q&A getting rid of items that are obsolete and changing items that needed changing.
In addition to a forum for sponsors to deal with vendors not following best practices, Goldbrum said, SPARK is considering a one-day forum for TPAs and vendors to help them get over their barriers to following best practices. The Institute is currently gathering feedback from vendors on whether they are interested and what they would like the forum to cover. He invited vendors and TPAs to email him at email@example.com.
Goldbrum also noted that despite the DoL's FAB 2009-02 allowing for leniency in coming up with opening balances for Form 5500 reporting, some auditors are drawing a hard line on not using an opening balance without going back and including all records. He invited sponsors to let him know if they encounter this, because SPARK is considering sending a letter to The American Institute of Certified Public Accountants (AICPA) for help with the issue.