Many Retirement Plan Sponsors Challenged by New Regulations, According to TIAA-CREF Institute Compliance Readiness Survey

New York, February 01, 2010

Although the new regulations governing 403(b) defined contribution retirement plans are already in effect, many retirement plan sponsors admit to not fully understanding compliance requirements, according to a survey from the TIAA-CREF Institute.

Most of the new regulations for 403(b) plans, issued in July 2007 by the IRS, took effect on January 1, 2009. The Department of Labor (DOL) has issued additional guidance on Form 5500 reporting for plans subject to ERISA (Employee Retirement Income Security Act of 1974). These new regulations require changes in both plan design and administration for 403(b) plan sponsors.

Key findings of the study include:

  • Nearly three-quarters (74%) of respondents believe they are fully compliant with the new regulations.
  • Nearly half (45%) acknowledge, however, that they have difficulty simply understanding those regulations.
  • The lack of confidence in understanding the new regulations is most pronounced around two issues:
    • The new standards of compliance and evolving fiduciary responsibilities, and,
    • Plan sponsors' readiness for annual plan audits, as part of the expanded Form 5500 annual reporting requirement to the federal government. Only about half (54%) indicated they were familiar with this reporting requirement.
  • Coordinating plan loans and hardships from multiple plan vendors also is an issue. Only 15% indicated they could monitor such activity through a consolidated report.

Penalties for plans not in compliance range in severity both for individuals and institutions, depending on the compliance or fiduciary issue. They may range from fines to full plan disqualification — which could make all plan assets subject to taxation.

"The survey suggests that the true compliance, reporting and administrative impacts are just beginning to be felt," said David Richardson, a Principal Research Fellow with the TIAA-CREF Institute and a co-author of the report. "Plan sponsors need to be cognizant of the risks their plans — and their plan participants — face if they are not compliant."

In commenting on their "challenges" in understanding the new regulations, plan administers told interviewers, "It's just complex, long, difficult to understand," and "It was not written on the layman's level. It was written for those with law degrees."

"Those who are confused shouldn't delay in getting the help they need," said Paul J. Gallagher, Managing Director, Product Management for TIAA-CREF and the other co-author of the report. "We urge plan administrators to take advantage of existing programs and services to ensure they fully understand their obligations under the new regulations and to help ensure their plans are in compliance."

TIAA-CREF has utilized its experience as a leading 403(b) plan provider to create a full suite of services and educational programs to help plan sponsors execute their compliance obligations under the new regulations. These services include plan document creation, investment consulting, proactive loan and hardship compliance monitoring through its Compliance Coordinator service, and assistance with audit requirements associated with Form 5500 financial reporting. TIAA-CREF also provides extensive communication and training for administrators, a comprehensive compliance guide and other services to help ensure plan administrators can meet their 403(b) plan compliance and fiduciary responsibilities.

About the Survey
The TIAA-CREF Institute contracted with KRC Research to conduct the survey. The study involved a telephone survey in June and July 2009 of more than 400 plan administrators at not-for-profit institutions with 403(b) plans across seven major market segments, including public and private higher education, public and private K-12 education and healthcare providers and hospitals. Their plans were administered by a wide variety of plan providers. The entire survey report can be read here.

TIAA-CREF ( is a national financial services organization with more than $402 billion in combined assets under management (9/30/09) and the leading provider of retirement services in the academic, research, medical and cultural fields.

About the TIAA-CREF Institute
The mission of the TIAA-CREF Institute, part of TIAA-CREF, is to foster objective research, build knowledge, support thought leadership, and enhance understanding of strategic issues related to higher education and lifelong financial security. For additional information, please visit

Media Contact:

Abby Aylman Cohen, Manager, Corporate Media Relations, 212 916-4381 Cell: 1 917 596-4758

TIAA-CREF Individual & Institutional Services, LLC and Teachers Personal Investors Services, Inc., members FINRA, distribute securities products. TIAA-CREF Institute is a division of Teachers Insurance and Annuity Association (TIAA), New York, NY.

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