Single Vendor = ERISA Plan?

[Guest cphcs]

An employer only permits one vendor to receive contributions under the employer's deferral-only 403(b) plan, but otherwise is completely hands-off in plan administration and would appear to satisfy the requirements to be a non-ERISA plan. Does the fact that the employer has only allowed one vendor negate the other factors that seem to indicate non-ERISA status?

I have not seen DOL rulings on this and am wondering if there is a consensus view that this would be an ERISA plan regardless of any other facts.

Thanks

[Guest mjb]

An employer only permits one vendor to receive contributions under the employer's deferral-only 403(b) plan, but otherwise is completely hands-off in plan administration and would appear to satisfy the requirements to be a non-ERISA plan. Does the fact that the employer has only allowed one vendor negate the other factors that seem to indicate non-ERISA status?

I have not seen DOL rulings on this and am wondering if there is a consensus view that this would be an ERISA plan regardless of any other facts.

Thanks

You havent seen any rulings because there aren't any. The regs allow the employer to limit vendors to a reasonable number based upon the facts and circumstances. Many employers are too small to have more than one vendor because of the low premium amount of employee deferrals.

[Peter Gulia]

The DoL has published some views on other aspects of its rule [29 C.F.R. § 2510.3-2(f)] of safe-harbor conditions under which a made-available 403(b) program is not a plan “established or maintained” by an employer. But on questions about how much choice of “funding media or products” or “contractors” is enough to be “reasonable” in the sense provided by the rule, it hasn’t published guidance beyond the rule itself and the 1977 and 1979 preambles to the interim and final rules.

An ERISA Advisory Opinion is unlikely. The 1979 preamble to the final rule stated that “such decisions can be made properly only on a case by case basis” and noted ERISA Procedure 76-1, § 5.01 (“inherently factual”) to signal employers that the DoL didn’t want to “referee” these questions.