The $49 billion California State Teachers' Retirement System, Sacramento, plans to terminate a floundering $25 million tax shelter annuity 403(b) plan, but hopes to begin a new and improved one.
James Mosman, chief executive officer, said the existing plan is hurt by legal restrictions that, among other things, bar the system from communicating with the participants. Participants are withdrawing money from the plan - it had a high of $30 million in assets - and it offers only a money market fund option.
California Assembly Bill 3064, sponsored by the California Teachers Association and the Association of California School Administrators, would require the system to offer a new tax shelter annuity plan.
Under the bill, the system could advertise the availability of the plan, and at least three investment options would be offered.
Mr. Mosman believes the legislation would permit the system to offer a viable annuity. The new plan could be administered by the system or a third-party administrator.
The legislation is before the Assembly's Ways and Means Committee with no set hearing date.