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ERISA and Non-ERISA 403(b)

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I have a prospective client who has a non-Erisa 403(b) for the NHCEs to defer, and an ERISA 403(b) for the charter founders to defer and get a PS contribution.  We've been called in because while the non-ERISA document excludes charter founders and the ERISA document excludes everyone else, a founder had been deferring to the non-Erisa plan and got a profit sharing contribution in the Erisa plan (she did not defer to the Erisa plan).

My questions are - can you set the plans up this way - ie can you aggregate the non-Erisa and Erisa plans to make sure the NHCEs aren't discriminated against for coverage, and if so, does it all get messed up with having the 1 founder deferring into the non-Erisa plan (I know it violates the document but it only happened this year so we should be able to amend the doc to permit it).


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Leaving aside questions about whether either (or any) plan is not governed by ERISA,

Your description doesn't say whether all, some, or none of the charter founders are highly-compensated employees.

Remember, because a charity has no 5%-owner, there might be few highly-compensated employees, or even none.

Counting the exact numbers of HCEs and NHCEs might affect some analysis on your questions.


Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania



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After 2009, a Non-ERISA plan which depends on an ERISA plan for an allocation rule causes the "Non-ERISA" plan to become ERISA.   I would argue that you have two ERISA plans (instead of an ERISA and a Non-ERISA) and  therefore, perhaps, (see Peter's comment)  problems with the PS allocation.  If the auditor tracks with the theory I am referencing, you also have problems with not filing a 5500 for the plan you thought was Non-ERISA.


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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