The OMNI Observer September 2009

• Although the school year is just beginning, the end of the fiscal year is just one quarter away! 2009 has been defined by some tremendous changes across the 403(b) industry. Those first few stressful months saw a phenomenal surge in the number of incoming phone calls OMNI received. As employees, employers, and financial advisors all scrambled to adjust to the new reality of the industry, OMNI worked overtime to create the infrastructure to field the multitude of questions we were receiving.

  The end result was the resoundingly successful Customer Care Team. Since its inception, Customer Care has been responsible for a staggering increase on the percentage of answered phone calls…take a look at some of the figures below:

For many of OMNI’s clients, a new year is just getting started – and 403(b) contributions may be the last thing on your mind. Although the excitement of a new school year is still running high, for your 403(b) account, the end of 2009 is very much in sight. For many participants, this raises a deceptively simple question: how much can I contribute this year?

As you may know, the IRS dictates how much you can contribute based on a variety of factors, this amount is know as your Maximum Allowable Contribution (MAC). Your personal MAC is dependent on your age, length of service, and contribution history. The contribution limits below apply to EMPLOYEE (elective) contributions only. Your employer may choose to make additional contributions on your behalf, which would be subject to different limits. In this issue, we’ll be discussing your employee contribution limits; take a look at the information below and see where you stand!

• BASIC LIMIT: According to the IRS, every 403(b) participant is entitled to contribute $16,500 into their plan for the 2009 fiscal year. This limit is universal; if you can contribute to a 403(b) you can ALWAYS contribute at this level…but you might be eligible to shelter some additional funds.
• AGE CATCH-UP: if you are over the age of 50, you are entitled to contribute an additional $5,500 this year, making your total allowable contribution $22,000. This provision is automatically made available to all plan participants who meet the age requirement.
• SERVICE BASED CATCH-UP: this is where things start to get interesting! Veteran employees, boasting 15 or more years of continuous service with the same employer, MAY be eligible to contribute an additional $3,000. If eligible, this can increase your contribution limit to $19,500, or to as much as $25,000 if you can utilize both catch-up provisions.

Eligibility for the service based limit extension is not automatic. IRS regulations require that your lifetime average contributions are LESS THAN $5,000 annually from your date of hire. The IRS allows $15,000 to be contributed as part of the service based limit extension. This means that, unlike the age-based extension, you can only utilize the service extension for a limited time.

OMNI works directly with employers to calculate your MAC eligibility. If you approach your limit for the year, OMNI will directly notify your employer, and you will have ample time to change your contribution amount using an online Salary Reduction Agreement (SRA).

We take our obligation to you and your employer seriously- when it comes to contribution limits, we’ve got your “MAC!”.

Here at Omni, the Remittance Department is continuing to refine the remitting process in an attempt to make each transaction as easy for you as possible. Here are some important tips to remember when looking at the remittance of your 403(b)

• NON-ELECTIVE CONTRIBUTIONS- are made by your employer on your behalf, and typically cannot be taken as ‘cash’ (i.e. they must be deposited into your 403(b) account directly). OMNI will work with your employer to handle these contributions. DO NOT FILL OUT AN SRA FORM FOR YOUR NON-ELECTIVE CONTRIBUTION! SRA forms are for employee (elective) contributions only.
• WHEN TO USE AN SRA – To ensure your organization is in compliance with the new IRS regulations, OMNI cannot remit contributions without a corresponding SRA. If OMNI receives an amount from your employer that differs from your most recent SRA, we will immediately notify your payroll department. Although we can hold the deductions for one payroll cycle to allow you time to complete an updated SRA, if one is not received, we must return the money to your employer.

• OMNI Looked to for Industry Wide Leadership
• OMNI’s General Counsel is heading a national task force on Best Practices and Education where industry leaders will be working to set standards for the industry; allowing us to get the job done for you efficiently and seamlessly.
• OMNI’s Chief Compliance Officer is participating in a nation-wide TPA Task Force established by SPARK (Society of Professional Asset-Managers and Record Keepers).
• The goal of each of these industry wide conferences is to see TPAs, vendors, and service providers working together to seek efficiencies and establish best practices. The end result will be a faster, more efficient, and more pleasant experience for everyone…especially you!

• April 2009
• June 2009