New 403(b) regulations generally consider all accounts with active contributions in the plan from January 1, 2009, to have the highest sense of compliance obligation from a plan sponsor perspective. Thus, it’s critical that both the documents and the generic Service Provider Agreements requested from active providers be carefully crafted to support that requirement.

The Qualified Service Provider Agreement found on 403bUniversity.com was carefully crafted to support your plan’s form and operation as it relates to the model plan document provided. It is imperative that each provider that will be active and receiving contributions after January 1, 2009, sign this agreement prior to receiving contributions. Non-ERISA plans should consider such an agreement carefully with their legal counsel to ensure adherence with FAB 2007-02.

In addition to the careful consideration of the plan’s form and operation, the plan document and Qualified Service Provider Agreement found on 403bUniversity.com can have other key benefits to your organization. The Qualified Service Provider Agreement asks for a signature from an officer of the company and contains basic provisions to create accountability from your vendor(s) of choice. This can help ensure that vendor(s) are accountable for ongoing compliance operations and will be held to the standards set forth in your document.

Frequently Asked Questions

What is the difference between an Information Sharing Agreement (ISA) and a Qualified Service Provider Agreement?
Information Sharing Agreements are generally designed to provide guidelines for sharing of information between the plan sponsor and providers that have accounts “outside the plan” under Revenue Procedure 2007-71. Information Sharing Agreements are not prohibited for accounts inside the plan but may be useful to help formalize procedures, information flow, etc.

A Qualified Service Provider Agreement will offer the concept a step further and provides specific guidance, direction and accountability for your selected vendors to maintain the compliance integrity of your plan. Again, non-ERISA plans must carefully review such agreements with their legal counsel to ensure decentralized administration.

Can I use Compliance Essential with only ISAs and not Qualified Service Provider Agreements?
Generally, no. A provider that may affirmatively sign an ISA may not be held to critical form and operation requirements set forth specifically through the Qualified Service Provider Agreement. It should be noted that the Qualified Service Provider Agreement makes strong efforts to accommodate different vendors and product types and is available for vendors approved for contributions only, and for vendors approved for contributions, loans and hardships as a vendor.

What if a vendor refuses to sign the agreement?
Plan sponsors and vendors alike generally recognize that compliance with the employer’s plan document and entering into a Service Provider Agreement consistent with the plan’s requirements are essential to an ERISA-covered plan’s form and operation. Many plan sponsors are clearly directing vendors that if they are not willing to sign the agreement, they will not be included in the plan going forward. Non-ERISA plans should consult with their legal counsel regarding the need to require Service Provider Agreements.

Should I keep the agreements on file for future use?
Yes, you will want to maintain copies of your document and all vendor agreements in a secure location for future use. You may need to refer to those agreements in the future as you consider design or vendor changes, or if you receive notice of inquiry from the IRS on an examination of your plan.

Can I keep our ISAs together with the Qualified Service Provider Agreements?
Yes. Information Sharing Agreements are generally required for all exchanges outside the approved providers in the plan and are a way to formalize communication with all providers if additional information is needed. Information Sharing Agreements with all providers should be stored for future reference. Note that they might not contain the key requirements needed for active vendors after January 1, 2009.