Jump to content

Change in sponsorship of 403(b) - ERISA to Non_ERISA


Guest Roxanne Walters

Recommended Posts

Guest Roxanne Walters

I have a 403(B) plan currently sponsored by a 501©(3) organization. If the sponsor changes to a 501©(3) governmental entity will the government status enable the plan to rely on a deemed pass of all group compliance testing? Also the plan will go from ERISA covered to Non-ERISA covered. It is my assumption that the assets in the plan prior to the change in sponsor will continue to be subject to ERISA therefore the funds will have to be accounted for separately. Is that an accurate assumption?

Link to comment
Share on other sites

This is one of those totally unanswered questions that employee benefits lawyers like to speculate on. It could be argued that because the original exemption of governmental plans from funding requirements reflected the fact that the governmental entity would back up the plan's promises even if the plan itself lacked adequate funding, the exemption should apply to the whole plan, not just the portion derived during the period of governmental status. However, there simply is no authority as to what happens when a plan changes status, either from nongovernmental to governmental or the reverse.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...