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If a 403(b) plan allows for employer contributions (such as the option is selected in the AA), but does not fund the contributions, can the plan be a non-ERISA plan? I'm thinking not, but don't believe that 29 CFR § 2510.3-2(f)(3)(iv) confirms that for me. There's no "funding," but does the "option to fund" indicate 29 CFR § 2510.3-2(f)(3)(iv) has not been met??

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I am unaware of any published court decision that is on point for your question.  Skillful lawyers could argue a wide range of possible interpretations.


If your client is the employer and it prefers a non-plan, it might want its lawyer’s advice about:

how strongly or weakly evidence beyond the document shows that the document’s provision was not the employer’s intent and is not employees’ reasonable expectation;

whether the document may be equitably reformed to get rid of the scrivener’s error and state only provisions the employer intended.

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Hi Peter - for my own edification, I want to see if I have some of the nuances right here. First, the 2510.3-2(f) is a safe harbor - and meeting this safe harbor is itself a facts and circumstances determination, correct? And even if you fail to satisfy this safe harbor, the fact that it is a safe harbor allows you to still theoretically avoid ERISA status, even if you fail to satisfy the safe harbor? 

Is it your best guess (or direct experience) that the DOL would more likely focus on the document, or the operational compliance aspect?

Just curious. I sincerely hop to never encounter this situation! Thanks.

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29 C.F.R. § 2510.3-2(f) is not the only way to show that an employer didn’t establish or maintain a plan.


Yet, courts’ decisions about arrangements for payroll-deduction pay-overs to buy voluntary insurance at least consider, and mostly apply, the somewhat similar rule—29 C.F.R. § 2510.3-1(j).


While I have deep experience (from 1984 through 2005) about § 403(b) arrangements intended as a non-plan, all that experience was before the Treasury department interpreted IRC § 403(b) to require a written plan.  Although I’ve advised charities (from 2006 through as recently as a week ago) about how to avoid involvement in claims decisions, none of those charities attempted to avoid establishing a plan.


For many situations in which an employer believes it has a non-plan, the bigger risk exposure is that a participant’s surviving spouse discovers the spouse was not named as the participant’s beneficiary and learns that, if the plan is ERISA-governed (or a court so decides), the beneficiary designation might be invalid.

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  • 2 weeks later...

I view it as there are three types of 403(b) plans:

- Plans that are not subject to ERISA

- Plans that are subject to ERISA

- Plans that the employer erroneously believes are not subject to ERISA but it eventually becomes evident are indeed subject to ERISA


Tell your client that they want to make sure they avoid being in the last category.

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