403(b) Universal Availability


IRS Regulations 

IRS regulations require that all 403(b) plans offering salary deferral contribution elections meet a Universal Availability Rule, which is the blueprint to assure that all employees are notified of the opportunity to make pre-tax contributions. The regulations provide that all full-time and part-time employees must be permitted to make pre-tax contributions to a 403(b) plan, subject to a few limited exceptions. (Note: Employers may not exclude collectively bargaining employees from a 403(b) plan.)

In order to meet this requirement, employees must be given an effective opportunity to make or modify an election to participate. There are a number of methods, including the distribution of the 403(b) Smart Account form, that meet this requirement. The regulations specifically suggest that the following notices should be given to employees:

  • Notification to new employees of the opportunity to elect to participate via voluntary contributions
  • Notification to all employees, at least once during each plan year, of the opportunity to contribute or change their level of contributions

YMCAs should provide all employees with a notice about their ability to participate in the 403(b) plan upon their date of hire and should remind existing employees of this opportunity at least once a year.

It should be noted that the Universal Availability Rule for the Savings Plan applies immediately upon employment, regardless of age or hours of service. Unlike the Retirement Plan, the Savings Plan has no two-year service requirement prior to enrollment.

How The Regulations Apply to your y

Once an employee is enrolled in the Retirement Plan, the Fund sends the new participant a Welcome Kit, which includes information about the opportunity to contribute pre-tax to a 403(b) Smart Account. The Fund also highlights the 403(b) Smart Account in its mailings to participants, such as the quarterly and annual account balance statements, as well as the Annual Report.

However, the Fund does not have a way to reach all of your Y’s employees directly if they are not already participants in the Retirement Plan. As a result, your Y should promote the Savings Plan to all employees upon their date of hire.

The failure of any one Y to meet the Universal Availability rule could cause the disqualification of our Plan, which could result in adverse tax consequences to employees and the imposition of penalties upon Ys.

Resources to help your y

These tools help Ys communicate the benefits of a 403(b) Smart Account. The Fund can also work with your Y to tailor a communications message to your employees.

What your y should do

The local Y’s serve as a key role in educating staff about their eligibility to participate in the 403(b) Savings Plan. Local Plan Administrators should visit the Tools & Resources section in YERDI to gain access to the Communication Guide to support educating and communicating with their staff about this benefit throughout their time at the Y.

Coordination with multiple plans

If your Y (or an entity that your Y is under common control with, such as a YWCA) sponsors a 403(b) arrangement in addition to the Savings Plan, there are specific rules and complex administrative responsibilities under the 403(b) regulations that your Y must follow. Please call the Fund’s Customer Service Department for further information.