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Non-ERISA 403(b) started automatic contributions


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1. Yes.  Control over the plan is key to causing the plan to be ERISA and Auto-Enroll is control.

2. No.  Once ERISA;  Always ERISA.

I am sure you would appreciate some back up to my responses.  I did not have time to look today but can do so later this week.  I am pretty confident that I am correct, though.  Sorry.  This seems a severe consequence for very little, but Non-ERISA plans are precarious and many do not seek competent counsel or advice before taking such action.

Patricia Neal Jensen

Patricia.Jensen@QBILLC.com

Patricia Neal Jensen, JD

Vice President and Nonprofit Practice Leader

|Future Plan, an Ascensus Company

21031 Ventura Blvd., 12th Floor

Woodland Hills, CA 91364

E patricia.jensen@futureplan.com

P 949-325-6727

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The preceding post describes that ERISA governs a plan that is "established or maintained" by an employer.

But, even if so established or maintained, ERISA does not govern a governmental plan.

Likewise, ERISA does not govern a church plan unless the plan affirmatively elects to be governed by ERISA.

Consider also that a plan someone assumed was not governed by ERISA was governed by ERISA.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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Good points, Fiduciary Guidance.  He did not mention it being a governmental plan or a church plan so I assumed the sponsor was a nonprofit 501(c )(3).   (Probably should have articulated that assumption.)   Your last sentence is also true, but they are ERISA now!  When we are hired by a new client, I do not permit them to tell me they are/ were  Non-ERISA without a thorough examination of the facts.  Too dangerous as most think that employer contribution is the only rule.

PNJ

Patricia Neal Jensen, JD

Vice President and Nonprofit Practice Leader

|Future Plan, an Ascensus Company

21031 Ventura Blvd., 12th Floor

Woodland Hills, CA 91364

E patricia.jensen@futureplan.com

P 949-325-6727

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Thanks for your responses, much appreciated. The Plan is not a governmental plan. I should have included that information.

If you have authority for a pension plan being subject to the "once ERISA, always ERISA" rule I would love to hear it.  I've seen that rule for welfare plans but not pension plans. See, e.g., In re Stern, 346 F.3d 1036 (9th Cir. 2003). In Stern, a pension plan was originally subject to ERISA, but once only owners were covered, ERISA ceased to apply. Of course, that's different than whether a plan that was once "maintained" by an ERISA plan ceases to be maintained because participation is completely voluntary. I haven't seen a case in that context rule that ERISA ceases to apply.

 

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I have never seen any guidance that tells employers how to "shed" ERISA coverage, other than the 1978 transition guidance.  See DOL Reg. Sec. 2510.3-2(f) and the preamble.   Once a plan is "established and maintained," the employer is out of the safe harbor.

 

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