Final 403(b) Regulations

[Nassau]

I want to confirm that non-ERISA governmental plans are exempt from the 403B Regs. (i.e., employee-contributions only) My understanding is that these plan will not be affected by the Regs. So...no need for a written plan document, its still okay for partics to continue to self-certify hardships, there will be no reporting requirements, etc.)

[Guest GLBath]

That is not my understanding. I am not aware of any 403(b) plans that are subject to ERISA; most are governmental plans offered by school districts, and those school districts will be subject to the new regulations. I administer a 457 plan, but work with several school districts that offer 403(b) plans, so I am not a 403(b) expert, but I'm pretty sure all of our schools with 403(b) plans will have to adhere to the new rules.

You may want to check out the IRS website http://www.irs.gov/retirement/article/0,,id=172430,00.html and to through the FAQs with Bob Architect. Here's his response to one question:

2. Does having a written plan cause a non-ERISA 403(b) to become subject to ERISA?

Let us begin answering this question by stating right up front, particularly where education is concerned, to realize that any form of government is not subject to ERISA. So if we have a 403(b) in a public K-12 school, no matter what they did under that plan, it would not subject them to ERISA. Public universities are also not subject to ERISA.

So the answer to this question really addresses those employers in the 501©(3) tax-exempt community. There, the very fact that they put in a written plan where in the past they had not been necessarily subject to ERISA, the mere existence of a written plan or the mere compliance with the terms of the regulations, which, of course, contain the written plan requirement, would not, in and of itself, subject them to ERISA.

For additional guidance on ERISA in regard to Title I, which is administered by the Department of Labor, consult www.dol.gov/ebsa for guidance as to the issue of what subjects a 403(b) to ERISA.

[joel]

I want to confirm that non-ERISA governmental plans are exempt from the 403B Regs. (i.e., employee-contributions only) My understanding is that these plan will not be affected by the Regs. So...no need for a written plan document, its still okay for partics to continue to self-certify hardships, there will be no reporting requirements, etc.)

What do you do for a living? And what is the source of your "understanding"?

[Guest Penelope]

I want to confirm that non-ERISA governmental plans are exempt from the 403B Regs. (i.e., employee-contributions only) My understanding is that these plan will not be affected by the Regs. So...no need for a written plan document, its still okay for partics to continue to self-certify hardships, there will be no reporting requirements, etc.)

Non-ERISA 403(b) plans are not exempt from the 403(b) regulations. Those regulations apply to all annuities and custodial accounts that receive favorable tax treatment under Code section 403(b), without regard to ERISA coverage or governmental status. So there needs to be a written plan and all the rest of it.

ERISA coverage of non-governmental 403(b) programs is a whole 'nother messy story.

I agree that Bob Architect's materials on the IRS web site are an indispensable guide to the regs, especially because Bob wrote them.