COMPTROLLER'S SEAL STATE OF CONNECTICUT

STATE OF CONNECTICUT

NANCY WYMAN
COMPTROLLER
OFFICE OF THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775
MARK OJAKIAN
DEPUTY COMPTROLLER

MEMORANDUM NO. 2002-27 

July 15, 2002

TO THE HEADS OF ALL STATE AGENCIES

ATTENTION: Personnel and Payroll Officers
SUBJECT: State of Connecticut 403(b) Program

I. INTRODUCTION

The purpose of this memorandum is to advise of certain significant changes scheduled to take effect in the State of Connecticut 403(b) Program during the biweekly pay period from July 12, 2002 to July 25, 2002 (check date: August 9, 2002).

II. BACKGROUND

The 403(b) Program is an employer-sponsored, tax-sheltered retirement supplement, similar to the Connecticut Deferred Compensation (457) Plan. However, unlike the 457 Plan, which is open to all employees, the 403(b) Program is available only to state educational employees, pursuant to federal law. As a general proposition, employees of the following state agencies are eligible to participate in the 403(b) Program: (1) University of Connecticut, including the University of Connecticut Health Center; (2) State Universities, including the Board of Trustees; (3) Community-Technical Colleges, including the Board of Trustees; (4) Department of Higher Education; (5) Department of Education, including the Vocational-Technical High Schools; (6) Department of Correction, Unified School District No.1; (7) Department of Children and Families, Unified School District No. 2; and (8) Department of Mental Retardation, Unified School District No. 3. At the current time, approximately 6,500 employees are actively contributing to the 403(b) Program. 

Recognizing the 403(b) Program to be in need of reform and modernization, the General Assembly transferred responsibility for its management to the Office of the State Comptroller (OSC). Consistent with this grant of legislative authority, OSC began to pursue a number of improvements in the 403(b) Program, central to which was the competitive selection of six authorized Financial Services Organizations (FSOs) that could provide the best investment returns at the lowest costs while, at the same time, functioning as top-notch administrators and communicators. Accordingly, the following six FSOs have been authorized to participate in the 403(b) Program, effective with the biweekly pay period from July 12, 2002 to July 25, 2002 (check date: August 9, 2002): 

Fidelity Investments Oldham Resource Group
The Hartford TIAA-CREF
ING Financial Advisors Travelers Life & Annuity

III. DISCUSSION 

In early 2002, OSC began a communication campaign designed to inform eligible employees of 403(b) Program enhancements scheduled for implementation this month, including the selection of the six authorized FSOs. To date, OSC mailed an announcement of 403(b) Program revisions, followed by a quarterly newsletter (both unified by the common "Dollar Wise" theme), sponsored educational workshops across the state and, chances are, eligible employees have been contacted by representatives from more than one of the six authorized FSOs. 

Of the approximately 6,500 employees actively deferring in the 403(b) Program, roughly one third are contributing to FSOs scheduled for termination. These employees have been advised that, unless they complete a Salary Reduction Agreement (Form CO-1091) and submit it to their agency personnel/payroll office no later than the close of business on Friday, July 26, 2002, their contributions to the 403(b) Program will conclude in the biweekly pay period from June 28, 2002 to July 11, 2002 (check date: July 26, 2002). Effective with the biweekly pay period from July 12, 2002 to July 25, 2002 (check date: August 9, 2002) deferrals will be transmitted only to the 403(b) Program's six authorized FSOs. For your information and guidance, a copy of a letter being mailed by OSC to such affected employees on or about July 10, 2002 is attached to this Memorandum as Exhibit "A"

With respect to employees contributing to FSOs scheduled to exit the 403(b) Program, please be aware of the following: 

1. OSC's selection of the 403(b) Program's six authorized FSOs takes effect prospectively - specifically, with the biweekly pay period from July 12, 2002 to July 25, 2002 (check date: August 9, 2002). Therefore, there is no requirement that these employees consolidate their accumulations with an authorized FSO, though they may choose to do so; and
 
2. Assuming such employees decide to continue to participate in the 403(b) Program, they are not limited in their selection to one authorized FSO. OSC's Payroll Services Division is programmed to deduct contributions to more than one authorized FSO and, if necessary, all six; however, in view of the wide array of investment alternatives each FSO offers, the likelihood of any single employee deferring to all six should be remote.

IV. PAYROLL PROCESSING

A. Processing Details

Agency personnel/payroll offices will continue to be responsible for the maintenance of all employee payroll reduction transactions under the 403(b) Program. 

For the biweekly payroll period from July 12, 2002 to July 25, 2002 (check date: August 9, 2002) employee reductions to terminated FSOs will be discontinued centrally (period code set to zero). There is no action required on your part for employees contributing to one or more of the six authorized FSOs. The D/OE's for Fidelity and TIAA-CREF will be changed centrally. All Travelers deductions will be changed centrally to be routed to sort code 00049. Other sort codes will be inactivated.

The 403(b) Program Sort Code / D/OE Coding Chart (Section B) illustrates the new Sort Code / D/OE code combinations. Two new D/OE codes, 8Y and 8Z, have been created to accommodate those employees who choose to contribute to each of the six FSO's. Each FSO has been assigned a Primary D/OE. Preferably, when setting up a new reduction, you should use the Primary D/OE. However, if an employee has an existing record under the Primary D/OE, use the Successive D/OE in the order indicated (not applicable to Fidelity Investments or TIAA-CREF). If an employee is currently contributing to four of 403(b) accounts being eliminated, contact the Payroll Services Division for deduction coding instructions.

B. 403(b) Program Sort Code / D/OE Coding Chart

Financial Services Organization Old Sort Code New Sort Code Primary D/OE Successive D/OE's

Fidelity Investments (legacy accounts)

00024 00024 8Z N/A

Fidelity Investments (new accounts)

N/A 00071 8Z N/A

ING Financial Advisors, LLC

00016 00016 57 55,56,84

Oldham Resource Group

00124 00124 84 55,56,57

The Hartford Insurance Company

00026 00026 55 56,57,84

TIAA-CREF

00048 00048 8Y N/A

Travelers Insurance Company

00049
00084
00111
00146
00049 56 55,57,84

C. Generating NK/RK Transaction for TSA

1. Online Entry (MSA) - Screen 170

D/OE O M P T AMT/PCT/TBL OTHER CD
84 _ 1 A N 0004000 00124____ C
__ _ _ _ _ _______ _________ _

2. Remote Job Entry (RJE)

Generate an RK transaction with the following required information:

RECORD                      
POSITION: 1-2 3-4 5-6 7-16 17-18 19 20-22 23-29 30-34 35-36 37
DATA Tran LVL LVL EE DOE Blank Meth/ Per/ Type Amount Sort Blanks Code
Name: Code 1 2 Number   Code Of Deduct Code    
EXAMPLE: RK CT

YOUR

0000654321 8Z 1AN 0015000 00071 C
      PYRL              
      UNIT         $150.00      

RJE agencies: contact Shannon Brown at (860) 702-3458 or Marty Fortin (860) 702-3460 should you require any necessary system changes.

D. Fidelity Investments - Special Instructions 

For the biweekly pay period from July 12, 2002 to July 25, 2002 (check date: August 9, 2002) employees making active contributions to Fidelity Investments will have their reductions automatically migrated to D/OE 8Z and Sort Code 00024. These employees will be allowed to continue contributions to the previously offered investment options; maintenance transactions will be allowed using this Sort Code / D/OE combination. New transactions will not be permitted. All enrollments made subsequent to the close of business on Friday July 26, 2002 must be set up using D/OE 8Z and Sort Code 00071.

E. Salary Reduction Agreement Form 

Effective July 26, 2002, the six authorized FSOs will begin to utilize a common Salary Reduction Agreement (Form CO-1091) for all new enrollments and changes in or suspensions of payroll deductions under the 403(b) Program. A sample Form CO-1091 is attached to this Memorandum as Exhibit "B". After completion, the employee and the FSO must execute each Salary Reduction Agreement, then forward it for processing to the affected employee's personnel/payroll office. A separate Form CO-1091 must be completed for each FSO selected by an employee. Please note that, as Form CO-1091 requires original signatures of both the employee and a representative of the FSO, agencies should not accept facsimiles or photocopies.

V. CONCLUSION 

Inquiries relating to payroll functions should be addressed to the Payroll Services Division at (860) 702-3463. Questions related to the management and administration of the 403(b) Program may be directed to the Retirement & Benefit Services Division, Employee Benefits Unit at (860) 702-3543. 

Very truly yours,

NANCY WYMAN
State Comptroller

NW/sw

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