Are you writing 403(b) business? North American may have the tools to help your business grow.
A 403(b) tax-sheltered annuity is a retirement program allowed by the Internal Revenue code, allowing employees of most tax-exempt 501(c) (3) organizations to contribute pre-tax dollars for their retirement. The 403(b) plan regulations clarify that a 403(b) plan is an employer sponsored defined contribution plan and that 403(b) plans will be subject to many of the same compliance requirements and rules of other employer sponsored retirement deferral plans (such as 401(k) and 457(b) plans). Briefly, this means that the employer plan sponsor is required to have a written plan document that describes all the material terms and conditions of the 403(b) plan (such as eligibility, benefits, contribution limits, available distributions, and products available under the plan) and the employer must follow the terms of the plan as it is written. The written plan must include a list of all authorized product providers (such as insurers who provide annuity products). If a provider is not listed with the plan documents, that provider’s product is not an eligible product under the 403(b) plan.
Salary reduction helpful tips
To help you get started, here are three helpful tips as you approach an eligible employer:
- Is North American an approved vendor? The first step in entering a school district (or other 403(b) eligible employer) is to get in touch with the employer’s benefits department. The benefits department should be able to tell you this. Proceed to step two if North American is approved. If not, ask the employer if they are accepting new vendors and what their requirements are for new vendors. If they are accepting new vendors, have them complete the information sharing agreement (11916Z) and ask that North American be named as an approved vendor within their written plan document. If the employer uses its own version of the information sharing agreement form, this is acceptable, provided a copy is submitted to North American.
- Complete a billing supplement. A billing supplement (9099Z) should be completed and submitted if the employer would like to be billed for the salary reductions. Note: the billing process does not begin until the first salary reduction is received.
- Submit new business forms. Remember to complete an annuity application and all other appropriate forms for the product being selected.
Transfer or exchange of an existing 403(b)
The Internal Revenue Code (IRC) also allows clients with existing 403(b) accounts to roll over these funds into an IRA or other qualified retirement plan if they meet one of the applicable “triggering events” defined by the IRS. These “triggering events” include attainment of age 59½, death, disability or separation from service. An exchange will qualify as a non-taxable event if (1) the employer school district’s 403(b) plan permits transfers or exchanges and (2) either the transfer or exchange is for an eligible product under the employer’s 403(b) plan, or the product provider receiving the transfer or exchange has an information sharing agreement with the employer school district to share information for compliance with the 403(b) rules. Accordingly, North American will continue to accept 403(b) transfers and exchanges provided the following requirements are met prior to or at the same time of the submission of any exchange:
- The employer has named North American as an approved vendor within their written plan document.
- The employer has signed an information sharing agreement with North American, or the employer has an active payroll relationship with North American.
- A signed disclosure form (11907Z) from the 403(b) participant is received with the transfer or exchange request. The disclosure form will require the 403(b) participant to acknowledge and accept full liability, including any potential tax consequences, for transfers or exchanges.
Tools to write 403(b) business
North American is dedicated to providing you with the necessary tools and support you need to effectively plant and grow your 403(b) business. Some of these tools are as follows:
- 403(b) plans brochure (12417Z) – This client brochure explains the benefits of a tax-deferred plan and the detailed tax rules that are associated with a 403(b) plan.
- Mailbox stuffers – North American has created mailbox stuffers that you can use to market North American’s 403(b) annuities within school districts. These fillable marketing pieces can be altered to include your contact information.
- Billing supplement and salary reduction forms (9099Z and 9101Z) – North American provides these forms so that we can accurately and efficiently bill the eligible employers for the 403(b) salary reductions.
- Loans – When an employee is in immediate need of funds and the employer’s plan so permits, North American can provide a loan from his/her 403(b) annuity. Call North American for details on the loan provision. Note: loans can only be taken out of the fixed account.
Protect your assets and those you love with an industry leader
North American Company for Life and Health Insurance® is a leading insurance company in the U.S. Throughout our 100-plus year history, we’ve focused on providing growth, income, and financial protection to the clients we serve. Our insurance and annuity products have consistently provided value to our clients–in all types of market and economic environments. North American has continued to earn high ratings, based on our financial strength, operating performance, and ability to meet obligations to our policyholders and contract holders. North American currently holds the following ratings:
For additional questions get in touch with your CreativeOne team today at 800.992.2642