Last month, the Teachers’ Retirement System (“TRS”) requested school districts obtain their individual boards’ approval for participation in a new 457(b) plan offered by TRS and execute and return a Participation Agreement. This new plan, the TRS Supplemental Savings Plan (“SSP”), was created in response to 2018 legislation requiring TRS to offer an optional defined contribution benefit plan to active TRS members.
Although participation in the SSP is optional for TRS members (and employer contributions by school boards also are optional), TRS is taking the position that school district approval of the Participation Agreement is necessary, apparently to meet an Internal Revenue Code requirement for employer establishment of 457(b) plans and to effectuate pre-tax salary reduction arrangements. Unfortunately, the Participation Agreement shifts to school districts the responsibility and liability for salary withholdings, excess plan contributions, and operational error corrections. Note also that school districts already maintaining 457(b) plans will be responsible for tracking contributions to both their own 457(b) plan and the SSP to avoid excess contributions resulting from a combined contribution limit.
Many details regarding plan implementation are yet to be shared, including the processes for facilitating loans and hardship withdrawals. HLERK is in contact with TRS and continues to monitor developments.
Although TRS initially stated that the Participation Agreements were to be returned by March 31, 2021, subsequently, on March 5, TRS issued an Employer Bulletin in which they withdrew the March 31 date for submitting SSP Employer Participation Agreements over “widespread concern.” TRS also stated that employers are to check the TRS website for further updates as TRS rolls out the SSP and for notification once a date for launch of the SSP is established.
The latest Employer Bulletin can be found here.