Who owns title to assets under an ERISA 403(b) church plan?

[Guest rightsaidfred]

A church establishes an ERISA 403(b) for it's members and purchases what looks to be individual annuity contracts for each participant - each participant is listed as the owner of his/her contract - Due to the fact that this is an ERISA 403(b), should not these assets be held in trust and owned by the plan trustees ? Or is there an exemption to the trust requirement because it's a church - and therefore each participant may own his/her annuity even if it's an ERISA plan? Thank you all for your help.

[Guest rightsaidfred]

Anyone please ??

[rcline46]

At the risk of being pedantic, a 403(b) never has a trust, only custodial accounts. If invested in annuities then they are in the participants' names. If in mutual funds they are custodial accounts with a record keeper tracking individual accounts. You should review the IRC code itself and then the regulations on 403(b) plans.

[Guest mjb]

Read IRS publication 571, available at www.irs.gov (tab retirement plans) which states the tax rules for 403bs.

[Guest rightsaidfred]

I read it - doesn't answer my question. I do not deal much with these plans so the terminology can be confusing, but -

Generally speaking I know the basic distinction betwwen ERISA and NonERISA 403(b) - i.e., that the former is subject to ERISA bells and whistles if the employer makes contributions into the plan on behalf ofthe employees. AND - If the plan is subject to ERISA - does it not have to have a trust document and plan assets held in the name of the trustees - similar to say, a 401(k) plan ?

[Locust]

AND - If the plan is subject to ERISA - does it not have to have a trust document and plan assets held in the name of the trustees - similar to say, a 401(k) plan ?

No it doesn't have to have a trust document - it has to be either an insurance contract or a custodial account (if mutual funds) generally in the name of the participant. Note also that there are special rules for churches - they can simply hold the funds in a separate "retirement income account" if they want to.

In some ways a 403(b) account is more like a Simple IRA than a 401(k) Plan. [it's as if a company contributed to an employee's IRA.]

Also church plans generally are exempt from ERISA - like governmental plans - but not always!

These are complicated rules - it takes a lot of effort to get them straight, so be careful.