How Does The Information Sharing Agreement (Isa) Apply To 403B) And 457 Contracts

The IRS also introduced new rules for the exchange of contracts between suppliers in the same plan. Among these new rules is the famous “information sharing agreement” (or “ISA”) which conditioned the exchange according to the conclusion by the employer of an agreement with the issuer of the contract in which the funds are exchanged. Under the ISA, the employer and the new issuer undertake to make available to each other “from time to time in the future” the information necessary for the new contract or any other contract to which the employer has contributed to comply with section 403(b). This includes information on the participant`s employment status, the right to hardness and ability to borrow (and at what level), as well as information needed to meet other tax requirements. Don`t be misled; Nothing could be further from the truth. SPARK standards address the basic contractual information needed to meet isa requirements. There is no data on royalties; there is no investment data; There is no description of the services. The reference to the “SPARK Standard” as a solution to the DOL rules is certainly a very catchy marketing and distribution hook, but it is also very false. In response to these new data exchange requirements, a number of friends and colleagues from a large number of 403(b) providers partnered and worked diligently and efficiently for several years after the rules were published to establish information standards for the exchange of this data. They are called SPARK 403 (b) Information Data Elements Best Practices. In addition, ISA standards have been well developed by dedicated professionals, many of whom are passionate about this activity.

Indeed, they were a very successful “Skunk Works”. Much of the current value of the standards comes from volunteers who have changed positions inside and outside the original organizations that have engaged in the process. This is how sustainability is now addressed. The standards were also developed under the aegis of a small, very limited organization of specialized and administrative staff who, in addition to attempting to establish pension data standards in addition to the 403(b) standards, are heavily focused on establishing a new, separate “brand.” Durability, structure and support are necessary elements for the maintenance and development of these standards in maturity. It will be interesting to see what happens over time. Ultimately, as I have proposed in the past, the answer may well lie in the creation of a consortium funded largely by user fees; supported by a well-established centre such as a public university; and is led by a large number of stakeholders – not just suppliers….