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ERISA 403(b) Plan - two participants


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Like many of you, I work mostly with 401(k) Plans, but have a few 403(b)s.  I have a very small ERISA 403(b) Plan that currently has one participant.  They are hiring a new employee who will be eligible (of course) and the plan sponsor thought she could use the advisor of her choice because, apparently, the advisor on the existing account was the participant's choice.  I know that the 403(b) plan can offer different investment providers (all options offered to all participants), but can they also have multiple investment advisors?  Seems problematic. 

 

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Yes, they can allow multiple investment vendors/advisors. As a practical matter, as most plans grow, they will limit the number to something reasonable. If you have 50 participants and 50 different vendors/advisors, it gets administratively untenable. With 2 or 3 participants, I don't see it as much of an issue. Of course, some vendors are difficult to work with under any circumstances, but that's a separate issue.

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Thank you, Belgarath.  Would the Participant Fee Disclosure that goes to all participants need to include fund information and fees relative to all investment providers and advisors?  In this case, I believe there will only be one provider, but will have a different advisor on each of the two participant accounts.  Is this an issue if the advisors are charging different fees or including different fund options?

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Be sure to remind them to tell both advisors that the investment options for a 403(b) are limited to annuities and mutual funds.

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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