Act 5 of 2017 inserted Section 8411.1 into the Public School Employees’ Retirement Code that requires school districts, beginning July 1, 2019, to have a minimum of four separate “financial institutions or pension management organizations” for each 403(b) plan sponsored. The term “financial institutions or pension management organization” is intended to include providers of an annuity contract or custodial account (collectively referred to as “vendors”).
The Retirement Code also requires PSERS to select three “providers of investment options” for the School Employees’ Defined Contribution Plan (“DC Plan”), effective July 1, 2019. If one or more of the providers selected by PSERS for the DC Plan is also a vendor that has a contract with a school district for the school district’s 403(b) plan, then the school district is required to seek additional vendors to ensure that the school district has four vendors plus the vendor that was selected to be a provider for the DC Plan. In other words, the school district must maintain four vendors that are not also a provider for the DC Plan.
For example,
PSERS DC PLAN selects providers A, B and C for the DC Plan.
*Employer 101 contracts with vendors A, B, E, F and G for its 403(b) plan.
*Employer 101 must select one additional vendor, other than A, B or C, for a total of 4 vendors in addition to providers A and B of the DC Plan.
*Employer 102 contracts with vendors H, I J, L, N and Q for its 403(b) plan.
*Employer 102 does not need to select any additional vendors.
*Employer 103 contracts with vendor C for its 403(b) plan.
*Employer 103 must select four additional vendors, other than A, B or C, for a total of 4 vendors in addition to provider C of the DC Plan.
The PSERS Board approved the following investment options to be made available to the DC Plan participants:
T. Rowe Price Retirement Blend Target Date Funds
ICMA-RC VT Plus
PIMCO Total Return Instl
BlackRock High Yield Bond K
Templeton Global Bond R6
Fidelity® 500 Index Premium
Fidelity® Extended Market Index Premium
American Funds Europacific Growth R6
Oppenheimer Developing Markets I
PIMCO Real Return Instl
Fidelity® Real Estate Index Premium
Calvert Balanced R6
If you have a question regarding the number of vendors you may have or need, you can contact the third-party administrator of your 403(b) plan.