NTSA’s Commitment to Transparency, Educating Investors Gets SEC Nod

The NTSA is very pleased to announce that our persistent effort to ensure that public school employees receive the same important retirement plan information provided to private sector retirement plan participants, including fees, expenses and compensations, has passed a significant milestone: On Feb. 23, the U.S. Securities and Exchange Commission (SEC) issued a final letter granting relief under Rule 487 for NTSA’s Model Disclosure Form. 

Although NTSA has focused on disclosures for public school 403(b) plans, the SEC letter extends the relief to other retirement plans not covered by ERISA, including, but not limited to, 401(a), 457 and 415(m) retirement plans. 

Final approval from the SEC allows NTSA to pursue a similar request with FINRA (see below).

The 403bOpen Initiative

In 2011, NTSA launched the 403bOpen initiative in partnership with the National Education Association (NEA). Broadly, this initiative was necessary to make sure that public school employees received the same important information about their retirement plan accounts as employees of private education institutions. 

The 403bOpen project consists of two components: 

• Model Disclosure Form. The Model Disclosure Form outlines all of the required data elements closely mirroring the requirement under the Department of Labor’s 408(b)(2) regulation. 

• 403bOpen website. The 403bOpen website is the engine for delivering this important information to plan participants. It was developed by NTSA strategic partner AdminPartners, a third party administrator based in Cherry Hill, NJ that specializes in administering retirement plans for public sector and not-for-profit organizations.

The 403bOpen system will provide a universal database where investment providers can upload the required information that can then be selected as available investment options by a public school district or third party administrator. What’s more, 403bOpen provides the critical fee, expense and compensation information in an intuitive and easy to understand dashboard that lets plan participants easily compare and drill down into available investment options.

403bOpen goes beyond other passive online disclosure systems. In order to be compliant with the SEC letter, plans must actively distribute relevant information to eligible plan participants at least annually and every participant will be provided clear disclosures of all fees, expenses and compensation both at the point of initial investment and annually thereafter.

What This Means for 403b Investment Professionals, Investment Providers and Their Clients

For public education employees, the immediate benefit of our efforts will be that their plans can now provide the same important retirement plan information that 401(k) plan participants already receive. For investment professionals and providers, it means that all investment providers will be required to provide uniform disclosure of fees, charges and compensation related to 403(b) investment options. 

Next Stop: FINRA

Final approval from the SEC allows the NTSA to pursue a similar request with the Financial Industry Regulatory Authority (FINRA), the final step to providing a simple, standardized way for disclosing important investment fee, expense and compensation information across investment products, in a way that is easy for consumers to understand. We expect the FINRA request to be filed by Feb. 27.

Teamwork the Key to Success

The NTSA is grateful for the support of the NEA and the American Society of Pension Professionals & Actuaries (ASPPA). These organizations made it possible to reach this important milestone. We also appreciate the work that Groom Law Group, Chartered, diligently executed in representing the NTSA in this matter.

This project clearly demonstrates the NTSA’s commitment to professional best practices. Look for more information about this exciting initiative soon!

Chris DeGrassi is the Executive Director of the NTSA.