Earlier this week we talked a little bit about Universal Availability and how understanding UA can benefit a Plan Sponsor in managing their Plan. We wanted to expand on that discussion and go more in depth on the topic. Here is a broader look at Universal Availability.

UA is a rule under the IRS that requires employers to let employees make elective deferrals (if they wish to do so) within the company’s 403(b) plan. The idea behind the rule is to ensure that all eligible employees are benefiting from the 403(b) Plan equally. As a TPA that specializes in complex plan design, ADMIN Partners ensures that UA is a primary topic of discussion during the initial plan setup stage. We review the UA rule and the process that accompanies the rule throughout the life of the plan.

There are a few limited exclusions regarding the employees who can defer into the plan. Understanding these limitations is necessary when considering matters such as hours worked provision in the plan design. Examples of excluded employees would be:

You can find a more detailed look at the rules surrounding excluded employees, here.

Having a full service TPA like ADMIN Partners on board makes the approach to the UA rule much more manageable. However, even when the employer retains a TPA, the responsibility of the rule remains on the plan sponsor. The Plan Sponsor is required to provide an annual written notice to all employees stating that they are eligible to participant in the 403(b) Plan. This is what is referred to as the Meaningful Notice Requirement. While the IRS does not mandate how a meaningful notice is provided, ADMIN does encourage Sponsors to prepare more than one form of communication when providing the notice to their employees. We also provide templates for employers to utilize when sending out their annual notice which takes the administrative burden away from the Sponsor so they can focus on their day to day.

UA is considered a high-level target when 403(b) plans are audited by the IRS. In fact, most of the issues found when a plan undergoes an IRS audit is related to UA and the meaningful notice requirement. Plans need to be sure to maintain proof of the notice provided to employees each year. Failure to do so can often results in high penalties during an IRS audit. Plans using the support of a TPA like ADMIN will pay much less in fees to manage these standards than they would in penalties by the IRS.


Do you have more questions about how you can better manage your retirement plan? Feel free to reach out to us anytime by calling us (toll free) at 8 7 7 – 4 8 4 – 4 4 0 0 or via email at [email protected].