What Is the Unions' Responsibility

[Guest Joel Lee]

The employers love the salary reduction 403(b) arrangement because they are legally not the sponsor. In fact there is no "sponsor" like there is under sections 401(k), 457(b) and 401(a). Because they are not the sponsor they have no fiduciary responsibility. The 403(b) arrangment is simply a contractual relationship between the employee and the issuer of the annuity contract or custodial account.

Having said that, what legal responsibility does the American Federation of Teachers take on when they formally endorse and sponsor a 403(b) arrangement? Probably the same as the employer, none. So if the union is not a fiduciary should it have the right to enter into a sponsoring/endorsement agreement with the 403(b) issuer?

Peace,

Joel