403(b) Plan Loans

[Guest lawkid]

Do the ERISA spousal consent rules apply to loans by a contributory 403(B) plan? I would appreciate reference to concrete resources if available. Thank you.

[Belgarath]

I'm not a 403(B) expert, so when you say contributory, I'm assuming you mean that there are employer contributions? If so, then the ERISA prohibited transaction restrictions apply. (ERISA 406, 408(B).) So I'd say that yes, the spousal consent requirements apply.

[mbozek]

Spousal consent applies to a 403(B) plan which is subject to ERISA, i.e., the employer is a 501©(3) tax exempt organization to which the employer makes contributions and the plan is a money purchase type plan, e.g., employer promises to make periodic contributions. Some 403(B) plans provide for discretionary employer contributions, e.g., the employer may decide on an annual basis to make contributions to participants accounts. Discretionary plans are regarded as profit shaing plans and the only requirement is that the participant's account balance must be paid to the spouse upon death unless the spouse consents in writing to another beneficiary. Spousal consent is not required for loans. Non ERISA plans with employer contributions are not subject to spousal consent requirements unless required under state law. Spousal consent is required under ERISA section 205©(4) not under 406. Spousal consent to a 403(B) plan of a tax exempt employer which provides for only employee contributions is required if the plan is subject to ERISA. Ask the employer or plan admin. if the plan files a 5500.