NC 403(b) Program Exclusive Employer FAQs

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NC 403(b) Program Discontinuation Webinar for Employers

The North Carolina Supplemental Retirement Board of Trustees (Board) has decided to discontinue the NC 403(b) Program, opting to focus on the larger and more popular NC 401(k) and NC 457 Plans. The Board voted unanimously December 2 at its regularly scheduled quarterly meeting to eliminate this option following an in-depth review of the Program. The NC 401(k) Plan, NC 457 Plan, and NC 403(b) Program are jointly administered by the Board and Department of State Treasurer. Click here to read the full press release

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The North Carolina Supplemental Retirement Board of Trustees (Board) decided to discontinue the NC 403(b) Program, opting to focus on the larger and more popular NC 401(k) and NC 457 Plans. The Board voted unanimously on December 2 at its regularly scheduled quarterly meeting to eliminate this option, following an in-depth review of the Program.  

While the Program offered competitive, low-cost investment options, enrollment in the Program lagged in the crowded 403(b) marketplace.  

 

As a 403(b) plan sponsor who offers the NC 403(b) Program as an investment option within your plan, the NC 403(b) Program will cease to be an option for you and your participants. As a result, any participants with an account balance in the NC 403(b) Program’s investments will need to have these balances moved to another eligible investment or distributed to the participant (if the participant is eligible for a distribution under your plan). Other eligible investments for participants may include: 

  • New options in your 403(b) plan (if you decide to continue your plan). 

  • Taking a distribution under your plan (if eligible). 

  • The NC 401(k) or NC 457 Plan (if eligible). 

  • Another retirement plan. 

  • An Individual Retirement Account (IRA). 

The Department of State Treasurer and Prudential are here to support you during this transition. 

 

The process of discontinuing, or winding down, the NC 403(b) Program involves a series of actions that will take place throughout 2022. December 31, 2022 is the final discontinuance date for all employers offering the Program in their 403(b) plan. September 30, 2022 is the last day that all assets must be moved to another eligible investment or distributed to a participant. However, employers are encouraged to begin and complete the process as soon as is administratively feasible.  

There are several important deadlines to be aware of as an employer offering the NC 403(b) Program: 

  • May 31, 2022: Employer must make any required plan document amendments by May 31, 2022, if applicable. 

  • May 31, 2022: Employer must provide notice to Prudential whether it will discontinue or continue offering its 403(b) plan and the default investment option for participants (if the plan continues). 

  • June 30, 2022: The Program will not accept new enrollees after June 30, 2022. 

  • June 30, 2022: Employer and employee contributions may continue through the pay period ending June 30, 2022. The Program will stop accepting employee and employer contributions after this pay period. 

  • September 30, 2022: Account balance transfers, rollovers or distributions should be complete by September 30, 2022. 

  • December 31, 2022: The Program has a final discontinuation date of December 31, 2022.  

No later than September 30, 2022, all account balances in the NC 403(b) Program will need to be moved to another eligible investment or distributed to the participant (if the participant is eligible for a distribution under your plan). Other eligible investments for participants may include: 

  • New options in your 403(b) plan (if you decide to continue your plan). 

  • Taking a distribution under your plan (if eligible). 

  • The NC 401(k) or NC 457 Plan (if eligible). 

  • Another retirement plan. 

  • An Individual Retirement Account (IRA).

The discontinuance process will be unique for each employer and may be impacted by plan document updates, notices, filings, and data transfers, if applicable. However, please keep the following important deadlines in mind: 

  • May 31, 2022: Employer must make any required plan document amendments by May 31, 2022, if applicable. 

  • May 31, 2022: Employer must provide notice to Prudential whether it will discontinue or continue offering its 403(b) plan and the default investment option for participants (if the plan continues). 

  • June 30, 2022: The Program will not accept new enrollees after June 30, 2022. 

  • June 30, 2022: Employer and employee contributions may continue through the pay period ending June 30, 2022. The Program will stop accepting employee and employer contributions after this pay period. 

  • September 30, 2022: Account balance transfers, rollovers or distributions should be complete by September 30, 2022. 

  • December 31, 2022: The Program has a final discontinuation date of December 31, 2022.  

 No later than September 30, 2022, all account balances in the NC 403(b) Program will need to be moved to another eligible investment or distributed to the participant (if the participant is eligible for a distribution under your plan). Other eligible investments for participants may include:  

  • New options in your 403(b) plan (if you decide to continue your plan). 

  • Taking a distribution under your plan (if eligible). 

  • The NC 401(k) or NC 457 Plan (if eligible). 

  • Another retirement plan. 

  • An Individual Retirement Account (IRA).

You must make any required plan document amendments and notify Prudential of your go-forward approach no later than May 31, 2022. Your go-forward approach includes whether you will discontinue or continue offering your 403(b) plan and the default investment option you have selected for your participants (if the plan continues).

However, we recommend that you decide on your go-forward approach and make any required plan document amendments as soon as possible. This will minimize any potential disruption to your 403(b) plan and will allow you more time to implement your approach and communicate with participants. You also will give your participants the time they need to make decisions and act. 

You may elect to discontinue your 403(b) plan, or you may elect to continue offering your 403(b) plan using a new provider (i.e., a replacement for the NC 403(b) Program). Click here for information on terminating your plan.

If you are using the plan document (base plan document and adoption agreement) provided by the NC 403(b) Program, your plan will discontinue automatically through an amendment of the plan document. The North Carolina Supplemental Retirement Board of Trustees will amend the plan document with a discontinuation date and any other necessary updates. Prudential will provide you a copy of the amended plan document and notify you of your plan’s discontinuation date. The discontinuation date will be the same for all employers that use the plan document provided by the NC 403(b) Program. 

Your participants will receive a distribution of their money in your 403(b) plan; however, they will have the option to roll over their money to the NC 401(k) or NC 457 Plan (if eligible), another retirement plan, or an Individual Retirement Account.

If you are interested in terminating your 403(b) plan, we will have more information soon and you can reach out to your Prudential Retirement Education Counselor (REC).  

 

There are several steps to take in continuing your 403(b) Plan and it is best to start this process now to avoid any disruptions. The first step is to select a new vendor. 

  • Once selected, your new vendor should assist with the transition. 

  • They may have a conversion team that will work with you. 

As part of the discontinuance of the NC 403(b) Program, the program’s plan document will cease being an IRS Volume Submitter Plan and will become an individually-designed plan. You will receive a copy of the updated plan document, after which the Department of State Treasurer, the North Carolina Supplemental Retirement Board of Trustees, and Prudential will no longer provide support for the plan document. Also, your new vendor may have a new plan document that you wish to use. 

Your participants’ investments will need to be transferred from investments in the NC 403(b) Program to investments provided by your new vendor. For participants who do not select investments at your new vendor prior to the deadline (no later than September 30, 2022, as provided by Prudential Retirement), their investments will be transferred to new investments as selected by you. 

If you are interested in continuing your 403(b) plan, we will have more information soon and you can reach out to your Prudential Retirement Education Counselor (REC).  

 

Your Third-Party Administrator (TPA) needs to know these important dates: 

  • June 30, 2022: After June 30, 2022, no new employees can be enrolled in the NC 403(b) Program. 

  • June 30, 2022: No contributions will be accepted into the NC 403(b) Program after the pay period ending June 30, 2022. 

  • September 30, 2022: All balances must be transferred out of the NC 403(b) Program.

As part of the discontinuance of the NC 403(b) Program, the program’s plan document will cease being an IRS Volume Submitter Plan and will become an individually-designed plan. You will receive copy of the updated plan document, after which the Department of State Treasurer, the North Carolina Supplemental Retirement Board of Trustees, and Prudential will no longer provide support for the plan document. Also, your new vendor may have a new plan document that you wish to use.  

Please consult your benefits attorney. You must amend your document to eliminate any references to the NC 403(b) Program as an ongoing investment program within your plan.  

As always, Prudential Retirement is available to educate participants on retirement issues and the NC 401(k)Plan, NC 457 Plan, and the NC 403(b) Program. Participants can contact Prudential’s Retirement Education Counselors (RECs) or call Prudential at 866-627-5267. However, neither the Department of State Treasurer nor Prudential is in a position to provide financial or tax advice to participants, including advice on moving assets out of the NC 403(b) Program. 

The Program will not allow new enrollees after June 30, 2022. 

The Program will stop accepting employee and employer contributions after the pay period ending June 30, 2022. 

Beginning in January 2022, the North Carolina Supplemental Retirement Plans and Prudential will notify employees and employers of the discontinuance of the NC 403(b) Program and actions that are required to move participants’ assets out of the Program’s investments. As we move through 2022, communications will continue.  

If you are continuing your 403(b) plan, then you (as the plan sponsor) need to work with your participants in the NC 403(b) Program to transfer their accounts to another investment offering within your 403(b) plan. 

 

Participants in the NC 403(b) Program will receive a series of communications, beginning in January 2022. Communications and education opportunities will continue through 2022.  

Yes, the North Carolina Supplemental Retirement Plans and Prudential will continue to inform employers and participants about the discontinuance of the NC 403(b) Program and actions that are required to move participants’ assets out of the Program’s investments. In addition to emails and communications, Prudential will host a series of webinars in early 2022.  

Anyone with a NC 403(b) Program account, even retirees and other former employees, will need to be notified of their options moving forward. Former employees (regardless of the discontinuance of the NC 403(b) Program) generally have the option to take a distribution from their 403(b) accounts or roll over their accounts to another retirement plan (if eligible) or an Individual Retirement Account (IRA). In fact, former employees (and other employees who are eligible for a distribution) can roll over their 403 (b) accounts to the NC 401(k) or NC 457 Plan, so long as they opened an account in one of the plans before their employment ended. 

The Department of State Treasurer and Prudential will communicate with participants about the types of options that may be available to them depending on their circumstances and your decisions as the plan sponsor. However, as the plan sponsor, you have a direct understanding of the investment options available if you continue to offer your 403(b) plan with a new vendor. This should be communicated with your participating employees as soon as feasible, so they have time to understand their options and make a decision. 

This page will continue to be updated with new information as we move through 2022. There will also be opportunities for learning through webinars and engagement with Prudential’s Retirement Education Counselors (RECs).