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403(b) Universal Availability

Learn more about the IRS Universal Availability rule.

Universal Availability Best Practices

Universal Availability Infographic

403(b) Regulations

IRS regulations require that all 403(b) plans offering salary deferral contribution elections meet a Universal Availability Rule, which is the blueprint to ensure 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 to meet this requirement. The regulations specifically suggest that the following notices should be given to employees:

YMCAs should provide all employees with a notice about the 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 on 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 include in any other materials you like.

What Your Y Should Do

Here are some of the steps your Y should take to comply with the Universal Availability Rule. You may develop other ideas customized to your Y. (See the sample wording that you can include in new hire packets, employee handbooks, personnel policy manuals, or other handouts to new employees. 

  • Employee Manuals
    Make sure that your Employee Manual describes both the Retirement Plan and the Savings Plan, and that it clearly indicates that all employees may contribute to a 403(b) Smart Account immediately upon hire, regardless of age or hours of service.

  • New Hire Packets
    Provide information about the Savings Plan (and the Retirement Plan) to all newly hired employees in their new hire packets.

  • Open Enrollment Promotion
    Target a time each year, such as open enrollment for health and welfare benefits programs, to encourage all employees to open a 403(b) Smart Account, and remind those that do participate that they can change their level of contribution.

  • Newsletters & Benefit Websites
    Describe the Fund’s plans in employee newsletters and on your intranet benefit site, if you have one.

  • Employee Information Sessions
    Conduct employee information sessions, and utilize the Fund’s promotional materials to promote the Savings Plan. It will be important for you to keep records of the steps your Y has taken to meet the Universal Availability Rule.

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.