Request for Proposal 403(b) Third Party Administration Services (TPA) For Public Education Employers

Request for Proposal 403(b) Third Party Administration Services (TPA) For Public Education Employers A Regional Consortium of Public School Divisions (the Consortium ) is soliciting Third Party Administration organizations ( TPA ) that are qualified to provide administrative, compliance and communication services for the divisions 403(b) Plans. All school divisions are public education organizations and, as such, are exempt from the requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA). The participating school divisions and their respective number of currently participating employees are: Smyth County (236), Wythe County (344), Pulaski County (164), Scott County (350), Radford City (76), Bristol City (98), Carroll County (197), Bland County (59), and Floyd County (130). At the conclusion of this Request for Proposal process, the school board of each division will have the sole discretion in the awarding of any contract by the division. The specifications and requirements of the contracts of each division may differ based on the unique needs and desires of the respective divisions. Hereafter, the Plan Sponsor refers to a single school division. Prospective offerors may obtain a copy of the written Request for Proposal from the Smyth County School Board Office, 121 Bagley Circle, Marion, Virginia, 24354, Tel: 276-783-3791, or www.scsb.org. Nine (9) (one for each plan sponsor) complete copies of the sealed proposals shall be sent to Dr. Jeffrey Cassell, Director of Operations & Finance, Smyth County School Board Office, 121 Bagley Circle, Marion, Virginia, 24354. Each copy shall be complete and separately bound. Sections shall be formatted as outlined in the FORMAT FOR RESPONSES and identified to facilitate evaluation and to prevent evaluators from unnecessary search or arranging of materials for evaluation purposes. NO FAXED proposals will be accepted. Sealed proposals must be received by 2:00 p.m., local time, Friday, February 29, 2008. The official time clock is located in the Board room at Smyth County School Board Office. Proposals shall be received in sealed envelope, clearly identified on the exterior as REQUEST FOR 403B PLAN THIRD PARTY ADMINISTRATOR. I. OBJECTIVES The Plan Sponsor is soliciting sealed proposals from TPAs for the 403(b) Plan. The Plan Sponsor intends to select one TPA from responding organizations. While the services of the selected TPA may be subject to annual review, it is expected that services to the Plan Sponsor will continue for a period of at least two (2) years. II. SCOPE OF WORK The Plan Sponsor is intending to transfer 100% of the administrative and compliance responsibilities of the tax deferred annuity/custodial 403(b) Plan to a TPA. If awarded a contract, the selected TPA will collaborate with the Plan Sponsor s existing

403(b) vendors/providers and agree to provide the following services in a satisfactory, timely, and professional manner, subject to any limitations imposed by the Plan Sponsor. The Plan Sponsor expects that the following requirements (listed in question format) should be deemed as minimum services required of the TPA for this contract. Provide detailed responses and explanations to the requirements listed below: Legal/Regulatory Plan Document. Does your organization: Create and maintain an IRS qualified 403b Plan Document and modifications in compliance with federal and state regulations, or Do you use the IRS model 403(b) language to establish the 403(b) Plan? If yes, do you provide assistance with modifications to the model language for optional features and changes to the universal availability provisions? If yes, can you provide language for employer contributions and Roth 403(b) contributions? Do you assume responsibility for maintaining the compliance of all agreements, forms, documents and procedures? Do you provide strict oversight of all plan activities to ensure compliance with federal and state regulations? Do you provide assistance and representation for any IRS audit? Explain how such assistance is provided. Do you manage all distributions and optional features authorized by the Plan Sponsor s 403(b) Plan? Do you certify that employee transactions will comply with the terms of the Plan Sponsor s 403(b) Plan document and all laws and regulations regulating the transactions, e.g. account/contract transfers, plan to plan transfers, loans, hardship withdrawals, qualified domestic relations order (QDRO), etc? Employee/Employer Account Administration Does your organization: Monitor employer and employee contributions to the Plan Sponsor s 403(b), 457(b) and Roth 403(b) defined contribution plans (as applicable), advise and assist the district in taking appropriate corrective action whenever the situation requires such actions? Please explain how excess salary reduction contributions are corrected. Identify employer, employee and Roth contributions separately even if held in a single account? Establish & monitor maximum allowable contribution (MAC) limits for all employees and all vendors/providers including basic and catch-up limits? Manage all grand-fathered account activity for compliance with Federal and State laws and regulations, including good faith efforts to acquire and maintain information for compliance purposes with vendors or product providers who may no longer be providing products to active plan participants? Manage excess 415(c) contributions and the redistribution of excess contributions to 403(c) accounts? 1

Audit individual vendor/provider activity to ensure contributions are distributed to employee accounts in a timely manner when received? Audit for Federal and State legal compliance for all post-employment plan contributions? Submit any employee contributions received from the Plan Sponsor to the vendor or product provider no later than 5 days after receipt of such contributions? Provide information on changes to employee investment instructions to the affected vendors? Common Remittance Does your organization: Provide centralized clearinghouse services for contribution collection and disbursements in compliance with federal and state regulations and Plan Sponsor requirements? Salary Reduction Agreements Does your organization: Provide customized Salary Reduction Agreements ( SRA )? Process all Salary Reduction Agreements ( SRA ) for regulatory compliance and completeness i.e. MAC limits, Catch-up contribution co-ordination etc. and in conformity with the terms of the Plan Sponsor s 403(b) Plan? Communicate SRA payroll changes to the Plan Sponsor? Point of Contact /Accountability Does your organization: Serve as the primary contact for all investment vendors/providers, employees and financial representatives Communication/Education Does your organization: Provide information to the Plan Sponsor on latest legal & legislative requirements and any pending legislation? Conduct employee information meetings on a schedule to be determined by the Plan sponsor? Provide communications and methodology to meet compliance requirements of the Universal Availability Rule? Customer Service Response Does your organization: Provide timely customer service response to the Plan Sponsor, participants, vendors and product providers related to the 403(b) Plan? Data Security and Privacy Does your organization: Maintain confidentiality of employee database information? Agree not to use any information obtained as a TPA for any purpose other than plan compliance and administration? Marketing of products, selling or otherwise sharing any information with related or unrelated parties is 2

prohibited unless necessary for plan compliance purposes. III. INSTITUTIONAL ISSUES TPAs must respond to each question below. Background & Organizational Information Schedules a. Briefly furnish your organization s history, legal form (sole proprietorship, partnership, corporation and State of incorporation), number and location of offices, number of employees, days/hours of operation and other pertinent data. b. Disclose any conditions (e.g. bankruptcy or other financial problems, pending litigation, planned office closures, impending merger) that may affect your organizations ability to perform contractually. c. Certify that your organization and any principal of the organization is not prohibited, suspended or otherwise declared ineligible to contract or provide any services required hereunder by any federal, state or local public agency. d. Describe how your organization is properly licensed, bonded and/or insured (both fidelity insurance and errors and omissions insurance). e. Profile your organization s most noteworthy qualifications for providing Third Party Administration (TPA) services. Specifically highlight qualifications that distinguish your organization from competitors. f. How many 403(b) plans and participants does your organization currently service? What percentage of your total clientele are school district employees? g. How many non-erisa 403(b) programs do you currently service? h. Provide a list of five (5) current school district client references, including County Offices of Education and community colleges to which your firm currently provides similar services. Include entity name, beginning/ending dates of contracts, and contact information (name, title, telephone number and email address) of individuals that can be contacted as references for your organization. Administration and Compliance Procedures a. Describe how you will assume the necessary administration and compliance duties, responsibilities and overall activities that will be shifted to your organization as the TPA from the Plan Sponsor. b. Describe in detail how you will resolve administrative and compliance issues that arise, including the communications between the TPA, vendor/provider, the financial broker representative, and the Plan Sponsor c. Describe your procedures for establishing and maintaining Service Provider Agreements with the vendors and product providers to ensure their cooperation with information sharing needs and compliance with federal and state regulations. d. Describe your procedures that ensure that vendors/providers meet their agreed upon duties and responsibilities with the Plan Sponsor s 403(b) Plan. e. Describe your procedures for preventing excess employee salary deferral and employer contributions. f. Describe your procedures for the secure transfer of confidential employee data between the TPA, vendors/providers, and the Plan Sponsor. g. Describe in detail your procedures for receiving and processing Salary Reduction 3

Agreements. i. Does your organization provide common remitting services for 403(b) contributions? If so, please describe such services in detail and any applicable limitations or restrictions. j. Describe in detail the procedures you will use to certify employee qualification, and process employee transactions described below (as maybe available under the Plan): Fees and Expenses 1. Catch up contributions a. aged 50+ catch up, b. 15 years of service catch up 2. Roth contributions 3. Employer contributions 4. Contract exchanges 5. Plan-to-Plan transfers 6. Loans 7. Hardship withdrawals 8. Qualified Domestic Relations Order (QDRO) 9. In-service distributions 10. Distributions to correct excess deferrals and contributions 11. Separation from service distributions 12. Rollovers to state retirement plans 13. Rollovers to other eligible retirement plans. Describe the fees associated with the TPA services to be provided. Identify fees to the Plan Sponsor, the employees, plan participants, vendors and/or product providers. If fees are related to specific services or transactions, please identify those separately. Also indicate how long fees are guaranteed. Provide your fee schedule for the term of this contract as an Exhibit. Fees for renewal periods will be determined upon written agreement at the time of renewal. IV. TPA QUALIFICATION REQUIREMENTS Responding organizations must possess the following criteria and qualifications: a. TPA EXPERIENCE The TPA must, at a minimum, have at least three (3) continuous years of experience in the 403(b) tax sheltered account marketplace. Preference may be given to TPAs that are members of recognized professional associations i.e. NTSAA, ASPPA etc. b. SERVICING PROFESSIONALS EXPERIENCE The key individuals providing services to the 403(b) Program must have at least five (5) years of experience servicing 403(b) tax sheltered accounts, and at least two (2) years working with public schools. Experience with other types of 4

retirement programs may be considered, but will not be as important as 403(b) marketplace experience. Preference may be given to TPAs that use servicing professionals with recognized professional designations in the 403(b) marketplace and those taking professional continuing education classes. Provide the names and biographies of the individuals that will be responsible for delivering the services described in this RFP. c. ADMINISTRATIVE/SERVICING EXPERIENCE The TPA must have a minimum of ten (10) 403(b) tax sheltered account plans, with a total of at least 750 participants, to which it provides investment products and administrative services. Preference may be given to organizations with significant experience in the 403(b) plan marketplace. d. EDUCATION & COMMUNICATION EXPERIENCE The TPA must have a minimum of at least ten (10) 403(b) tax sheltered account plans for which it currently provides investment/retirement education services and/or communication services to participants in 403(b) plans. e. RECORDKEEPING EXPERIENCE The TPA must have a minimum of three (3) years experience administering and maintaining records on 403(b) plans and must have at least ten (10) 403(b) tax sheltered account plans for which it currently provides recordkeeping services. If the TPA is using contractors to perform these services, the contractors must be identified and must independently satisfy the requirements of this section. f. FINANCIAL STABILITY The TPA must provide two (2) years of audited financials. For organizations that are not subject to regulatory oversight by an agency of the federal government, a fidelity bond of at least $500,000 that provides protection to participants in the Plan Sponsor s 403(b) Program must be provided. In addition, proof of errors and omissions insurance must be provided. V. FORMAT FOR RESPONSES Each TPA s response should provide the following information in the order presented below: a. A TITLE PAGE The title page should indicate the name, address and telephone number of the TPA, a statement that the proposal is in response to this RFP and the name, title, telephone number and e-mail address of the contact person responsible for the 5

TPA s response. b. PROOF OF RESPONSES. Include all information necessary and appropriate to respond to all questions and qualification requirements identified in this RFP. c. SUMMARY STATEMENT The TPA should provide a summary statement relative to its qualifications in the 403(b) marketplace, as well as a brief description of any special considerations the Plan Sponsor should consider, such as: d. SIGNATURES Industry specialties not addressed in this RFP Unique industry strategies not addressed in this RFP Special expertise or experience in 403(b) plans and non-erisa plans Each proposal must include a certification from an individual authorized to represent the TPA stating that the statements made in the TPA s proposal are true and correct and that the terms of the RFP are understood to be included as part of any agreement between the TPA and the Plan Sponsor that relates to the 403(b) Program. VI. QUESTIONS RELATING TO THIS REQUEST FOR PROPOSAL TPAs that have questions regarding this RFP should submit them in writing to the person at the address set forth in paragraph (f), below. No questions will be answered after February 22, 2008. No telephone calls will be accepted relative to this RFP. VII. TRANSMITTAL OF COMPLETED PROPOSALS TPAs should send nine (9) (one for each plan sponsor) of their completed proposal in a sealed package to: Dr. Jeffrey Cassell, Director of Operations & Finance, Smyth County School Board Office, 121 Bagley Circle, Marion, Virginia, 24354. All materials must be delivered to the above address no later than 2:00 p.m., local time, February 29, 2008. VIII. INTERVIEWS The Consortium may elect to interview a select group from all TPAs that submit a proposal, but is not required to do so. The Plan Sponsors will make that decision 6

after reviewing the submissions and determining if interviews would be helpful in evaluating the TPAs proposals. Any TPAs selected for an interview will be expected to make a presentation followed by a question and answer period at Smyth County s administrative office. The total time for each interview shall not exceed 90 minutes. IX. SELECTION PROCESS SCHEDULES The following chart summarizes the expected schedule to be followed in selecting TPAs through this RFP: Date Action February 1, 2008 Release of RFP by Consortium February 22, 2008 Any questions on RFP must be submitted February 29, 2008 Completed Proposals must be received by Consortium March 14, 2008 Notification to TPAs/Interview invitations sent March 28, 2008 Interviews with TPAs completed (if applicable) April 2008 Final TPAs are selected and announced by Plan Sponsors X. HOW PROPOSALS ARE EVALUATED Each proposal will be evaluated using the following criteria to determine which TPAs are most capable of implementing the Plan Sponsor s requirements: a. TPA s experience with and ability to do the specific tasks and services requested. Significant focus will be placed on the TPA s experience in the 403(b) marketplace. b. Quality, comprehensiveness and reasonableness of cost for services and products recommended for the 403(b) Program. c. Expertise, experience in the marketplace, industry credentials and availability of individuals presented for servicing to the Plan Sponsor. d. Conformity with the requirements of this RFP. XI. RIGHTS RESERVED The Plan Sponsor reserves the right to award or reject, all or any part of, any submitted proposals. The Plan Sponsor may also elect to waive any clerical defects, irregularities and omissions if, in its judgment, the best interest of the Plan Sponsor and its employees will be served. XII. INSTRUCTIONS TO TPAS To be considered by the Plan Sponsor, each proposal must include a response to each question asked. Failure to respond to any question (s) may be considered cause for disqualification. Any information believed to be relevant may be submitted by each TPA as an appendix to the proposal, but should not be included in the answers unless 7

responsive to the specific question. References to supplemental materials should not be included in a response. All information necessary to respond to the question should be included in the response. Qualifications, Related Experience and References a.. Indicate who will be servicing the Plan Sponsor s 403(b) program. Identify the lead servicing professional(s). Should contractors be used to provide any services, submit the required information on the contractors and/or individuals acting on their behalf. b. Submit profiles of the individual(s) who will be assigned to provide the requested services, including their qualifications and recent related experience providing similar services. c. Detail the size of your organization, the location of the office from which this engagement would be performed, and the number/nature of the staff to be employed in this engagement on a full-time and on a part-time basis. d. Is your organization a member of any professional association under which members are required to adhere to a professional code of ethics and behavior? If yes, please indicate which association. e. Describe any quality control procedures that are in place. Detail your organization s backup emergency and disaster recovery system. Scope of Work Schedules a. Describe how your organization would accomplish the work and satisfy the Plan Sponsor s objectives outlined in this RFP. b Provide an overview relative to the resolution of payroll issues connected to remittance of salary deferrals. c. Define your processing model for the correction of excess deferrals and excess contributions. d. Describe how you will coordinate distributions (including loans and withdrawals) from the plan with vendors and product providers. Compliance Schedules a. Will your organization agree to sign the Service Provider Agreement and to incorporate its terms herein by reference? b. How quickly are contributions invested in participant accounts once received in good order by your organization? c. Does your organization agree as Third Party Administrator to notify the Plan Sponsor whenever a participant takes a hardship distribution from the 403(b) Program and advise Service Provider to stop all elective deferral contributions to all plans sponsored by the Plan Sponsor? d. Will your organization notify participants when Required Minimum Distributions (RMD) must begin? e. Does your organization agree to notify the Plan Sponsor if any participant defaults on a loan and further agree to bar future loans to any employee who has previously defaulted on a loan from the 403(b) Program, provided that you have 8

knowledge of such default? f. Describe your organization s approach towards managing the liaison between TPAs and the employer managing compliant Service Provider Agreements. Miscellaneous/Summary Statement If your organization believes that additional information is beneficial to help the Plan Sponsor evaluate your proposal, such additional information may be provided here. Do not repeat previously provided information. Any information provided should relate exclusively to your organization s 403(b) products or services, to the services or products indicated in the RFP or to services or products believed by your organization to enhance or compliment the Plan Sponsor s 403(b) program. It would also be appropriate to present any unique skills, procedures, or similar distinctions related to an ability to support the Plan Sponsor s 403(b) Program. GENERAL TERMS AND CONDITIONS VENDORS MANUAL This solicitation is subject to the provisions of the Commonwealth of Virginia Vendors Manual and any changes or revisions thereto, which are hereby incorporated into this contract in their entirety. The procedure for filing contractual claims is in section 7.19 of the Vendors Manual. A copy of the manual is normally available for review at the purchasing office and is accessible on the internet at www.dgs.state.va.us/dps under Manuals. APPLICABLE LAWS AND COURTS This solicitation and any resulting contract shall be governed in all respects by the laws of the Commonwealth of Virginia and any litigation with respect thereto shall be brought in the courts of the Commonwealth. The agency and the contractor are encouraged to resolve any issues in controversy arising from the award of the contract or any contractual dispute using Alternative Dispute Resolution (ADR) procedures (Code of Virginia, 2.2-4366). ADR procedures are described in Chapter 9 of the Vendors Manual. The contractor shall comply with all applicable federal, state and local laws, rules and regulations. ANTI-DISCRIMINATION By submitting a proposal, the offeror certifies to the Plan Sponsor that they will conform to the provisions of the Federal Civil Rights Act of 1964, as amended, as well as the Virginia Fair Employment Contracting Act of 1975, as amended where applicable, the Virginians With Disabilities Act, the Americans With Disabilities Act and 2.2-4311 of the Virginia Public Procurement Act. In every contract over $10,000 the provisions in 1. and 2. below apply: 1. During the performance of this contract, the contractor agrees as follows: A. The contractor will not discriminate against any employee or applicant for employment because of race, religion, color, sex, national origin, age, disability, 9

or any other basis prohibited by state law relating to discrimination in employment, except where there is a bona fided occupational qualification reasonably necessary to the normal operation of the contractor. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices setting forth the provisions of this nondiscrimination clause. B. The contractor, in all solicitations or advertisements for employees placed by or on behalf of the contractor, will state that such contractor is an equal opportunity employer. C. Notices, advertisements and solicitations placed in accordance with federal law, rule or regulation shall be deemed sufficient for the purpose of meeting these requirements. 2. The contractor will include the provisions of 1. above in every subcontract or purchase order over $10,000, so that the provisions will be binding upon each subcontractor or vendor. ETHICS IN PUBLIC CONTRACTING By submitting a proposal, the offeror certifies that their proposal is made without collusion or fraud and that they have not offered or received any kickbacks or inducements from any other offeror, supplier, manufacturer or subcontractor in connection with their proposal, and that they have not conferred on any public employee having official responsibility for this procurement transaction any payment, loan, subscription, advance, deposit of money, services or anything of more than nominal value, present or promised, unless consideration of substantially equal or greater value was exchanged. IMMIGRATION REFORM AND CONTROL ACT OF 1986 By submitting a proposal, the offeror certifies that they do not and will not during the performance of this contract employ illegal alien workers or otherwise violate the provisions of the federal Immigration Reform and Control Act of 1986. DEBARMENT STATUS By submitting a proposal, the offeror certifies that they are not currently debarred by the Commonwealth of Virginia from submitting bids or proposals on contracts for the type of goods and/or services by this solicitation, nor are they an agent of any person or entity that is currently so debarred. ANTITRUST By entering into a contract, the contractor conveys, sells, assigns and transfers to the Plan Sponsor all rights, title and interest in and to all causes of action it may now have or hereafter acquire under the antitrust laws of the United States and the Commonwealth of Virginia, relating to the particular goods or services purchased or acquired by the Plan Sponsor under said contract. MANDATORY USE OF FORMS Failure to submit a proposal in the requested format for that purpose may be a cause for rejection of the proposal. Modification of or additions to the General Terms and Conditions of the solicitation may be cause for rejection of the proposal; however, the Plan Sponsor reserves the right to decide, on a case by case basis, in its sole discretion, whether to reject such a proposal. 10

PRECEDENCE OF TERMS The following General Terms and Conditions, VENDORS MANUAL, APPLICABLE LAWS AND COURTS, ANTI-DISCRIMINATION, ETHICS IN PUBLIC CONTRACTING, IMMIGRATION REFORM AND CONTROL ACT OF 1986, DEBARMENT STATUS, ANTITRUST, MANDATORY USE OF FORMS, CLARIFICATION OF TERMS, PAYMENT shall apply in all instances. In the event there is a conflict between any of the other General Terms and Conditions and any Special Terms and Conditions in the solicitation, the Special Terms and Conditions shall apply. QUALIFICATIONS OF OFFERORS The Plan Sponsor may make such reasonable investigations as deemed proper and necessary to determine the ability of the offeror to perform the services/furnish the goods and the bidder/offeror shall furnish to the Plan Sponsor all such information and data for this purpose as may be requested. The Plan Sponsor reserves the right to inspect offeror s physical facilities prior to award to satisfy questions regarding the offeror s capabilities. The Plan Sponsor further reserves the right to reject any bid/proposal if the evidence submitted by, or investigations of, such offeror fails to satisfy the Plan Sponsor that such offeror is properly qualified to carry out the obligations of the contract and to provide the services and/or furnish the goods contemplated therein. PROPRIETARY INFORMATION If your proposal contains proprietary information, it must be clearly stated on a separate cover explaining which sections are proprietary and why. TECHNOLOGY GOODS / SERVICES All information technology which, pursuant to this Agreement, is purchased or upgraded by or for the use of any Commonwealth agency or institution or political subdivision of the Commonwealth (the Technology ) shall comply with Section 508 of the Rehabilitation Act (29 U.S.C. 794d), as amended. If requested, the Contractor must provide a detailed explanation of how compliance with Section 508 of the Rehabilitation Act is achieved and a validation of concept demonstration. The requirements of the Paragraph along with the Non-Visual Access to Technology Clause shall be construed to achieve full compliance with the Information Technology Access Act, 2.2-3500 through 2.2-3504 of the Code of Virginia. NONDISCRIMINATION OF CONTRACTORS A bidder, offeror, or contractor shall not be discriminated against in the solicitation or award of the contract because of race, religion, color, sex, national origin, age, disability, faith-based organizational status, any other basis prohibited by state law relating to discrimination in employment or because the bidder or offeror employs ex-offenders unless the state agency, department or institution has made a written determination that employing ex-offenders on the specific contract is not in its best interest. If the award of this contract is made to a faith-based organization and an individual, who applies for or receives goods, services or disbursements provided pursuant to this contract objects to the religious character of the faith-based organization from which the individual receives or would receive the goods, services, or disbursements, the Plan Sponsor shall offer the individual, within a reasonable period of time after the date of this objection, access to equivalent goods, services, or disbursements from an alternative provider. 11

It is the policy of the Plan Sponsor to contribute to the establishment, preservation, and strengthening of small businesses owned by women and minorities and to encourage their participation in State procurement activities. The Plan Sponsor encourages contractors to provide for the participation of small businesses and businesses owned by women and minorities though partnerships, joint ventures, subcontractors, or other contractual opportunities. CONTRACTOR S EMPLOYEES The contractor certifies that neither he nor his employees, having direct contact with students, has ever been convicted of a felony or any offense involving the sexual molestation or physical or sexual abuse or rape of a child and that neither has been convicted of a crime of moral turpitude. Upon submitting a proposal, the contractor must provide certification of this statement. The contractor shall not send any employee or agent who is a registered sex offender to any school building or school property. Monthly, the contractor shall check the registry to determine if the employee is registered. 12