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DIRECTOR OF HEALTH INFORMATION MANAGEMENT

School teachers, college professors and hospital employees should keep an eye out for changes in their retirement plans this year. That's because they are among the 10 million workers at non-profit and educational organizations who may face fewer investment choices and more restrictions on how they can use their retirement money because of new IRS rules.

The IRS is requiring retirement plans designed for tax-exempt non-profit groups and some public-sector workers — called 403(b) plans after the IRS code section that created them — to comply with stricter rules. The IRS has allowed such plans to operate with less oversight than their for-profit-world counterpart, the 401(k), for the last 40 years.

It's a significant development because employers, which include school districts, religious groups and non-profits with lean staffing, must take a more active role in managing their retirement plans.

Organizations have had a little more than a year to figure out what to do. That may seem to be plenty of time, but thousands of school districts and hundreds of thousands of non-profits don't have full-time benefits managers to oversee their retirement plans, said Kevin Watt, vice president of business development for Topeka, Kan.-based Security Benefit Corp.

"You can imagine not having any oversight, and not needing to do anything, to being completely responsible almost overnight," Watt said.

Failure to comply with the IRS rules could result in loss of tax-deferred status, causing employees to be responsible for paying taxes on the money in the funds. The IRS says organizations offering 403(b) plans must adopt detailed plan documents listing specific vendors, eligibility rules and guidelines for withdrawal, loans and distribution. As a result, some employees are seeing fewer investment choices as their providers choose not to continue offering certain products.