Ask the Experts April 1, 2014

(b)lines Ask the Experts – Differences in RMDs for 403(b) Plans

April 1, 2014 (PLANSPONSOR (b)lines) – “I have traditionally worked with 401(k) plans, but my new employer sponsors a 403(b) plan.
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“I am currently working on my first required minimum distribution (RMD) transaction with a 403(b). I am familiar with the 401(k) rules, but are there any differences for 403(b) plans?” 

Michael A. Webb, vice president, Retirement Practice, Cammack Retirement Group, answers: 

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Excellent question! Indeed there are some significant differences, mainly due to the fact that the 403(b) rules for RMDs essentially follow the IRA requirements, as opposed to 401(k) and other qualified plan rules, with some modifications. The key differences between 401(k) plan RMDs and the requirements for 403(b) plans are as follows:

1.      As is the case with IRAs, if a participant maintains more than one 403(b) account, he/she can total the RMDs from all 403(b) plans, yet withdraw the required minimum amount from only one 403(b) plan. In a 401(k) or other qualified plan, separate distributions are required from each plan. Note however, that accounts for which a participant is a beneficiary cannot be combined with accounts that the participant owned directly.

2.      In a rule that is unique to 403(b) plans, 12/31/86 balances are grandfathered from the present RMD rules and instead have their own separate rules that generally delay required distribution until the later of age 75 or April 1 following the year of retirement (see “(b)lines Ask the Experts- Required Minimum Distributions” for more details on this rule).

However ROTH 403(b) distribution rules follow the qualified plan rules with respect to timing (later of April 1 following the attainment of age 70 ½ or retirement) rather than the Roth IRA rules (where distributions are NOT required until after the death of the account owner). Also, unlike an IRA, a spouse cannot treat an inherited 403(b) contract as it were his/her own contract.

Thanks again for your question!

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.
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Deals and People March 31, 2014

Scott Davison Named CEO of OneAmerica

March 31, 2014 (PLANSPONSOR.com) - J. Scott Davison, CLU, ChFC, will begin serving as chief executive officer for the companies of OneAmerica on April 1.
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A 28-year industry veteran, Davison has held various leadership roles in his 14 years at OneAmerica including chief financial officer, executive vice president and, most recently, president since August 2013.

Under Davison’s leadership, OneAmerica has plans to grow assets under administration from a record $36.4 billion in 2013 to $50 billion in three years. To achieve this milestone, the company will add up to 50 staff positions in 2014, grow its sales force and invest more than $100 million in new technology and service capabilities in next three years.

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Davison tells PLANSPONSOR large pieces of this growth will be in its retirement business. “We’ll be hiring field sales professionals, expanding our distribution footprint, and investing more in technology and services,” he says. Davison points out that even though OneAmerica ranked number two in service with Boston Research Group, “we still think we can be better.”

OneAmerica has been in the retirement business for more than 51 years, and it is one of the firm’s two largest businesses, Davison notes. “We think there’s a huge opportunity in this business due to the retirement gap, and we intend to grow and be aggressive,” he says.

According to Davison, One America plans to grow all lines of its retirement business, including the nonprofit retirement business, “which is a big focus and a business we like.” He adds, “We will continue to push our broad product portfolio. We are an open architecture platform for everything from 401(k), to 457s, defined benefit and ESOPs.” OneAmerica has also recently entered the pension risk transfer business (see “OneAmerica Joins Pension Buy-Out Marketplace”).

Davison steps into the role of CEO following Dayton Molendorp’s retirement on March 31. Molendorp remains the non-executive chairman of the board of OneAmerica and its parent company American United Mutual Insurance Holding Company.

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