Fall 2011 issue of Horizons

Not-For-Profit

Is Your 403(b) Plan Subject to ERISA? By Wayne Isaacs, JD, CPA, CEBS

Are you required to meet the standards of the Employee Retirement Income Security Act (ERISA) for your organization’s 403(b) plan? Generally speaking, governmental plans and plans with only employee deferral contributions (that meet the DOL safe harbor requirements) would not be considered ERISA 403(b) plans. However, 403(b) plans that would be subject to ERISA compliance are those where employers have discretionary authority and control over plans or those with employer contributions. The DOL issued Field Assistance Bulletin 2007-2, which identified the requirements for a 403(b) plan

with employee contributions only. The employer must only be performing “ministerial functions” and the following attributes must be in place: • Employee participation is voluntary • Employee can enforce all rights under the annuity or custodial account • Employer’s involvement is limited to certain optional activities, such as: - publicizing provider products - requesting information about the funding media or products - summarizing information about the funding media

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