Administrative Responsibilities

[Guest Kevin1]

Regulation 403(b)-(3)(b)(3)ii provides for allocating of certain plan responsibilites. This seems to be to remove ERISA responsiblities from the employer. Other articles nominate the TPA for these tasks. What responsibilites, legal, ERISA or otherwise are assumed by assuming on these tasks?

[J Simmons]

Hi, Kevin1,

If a 403b plan is subject to ERISA, both the IRC and ERISA provisions would have to be observed. I don't think the DoL or courts would agree that Treas Reg § 1.403(b)-(3)(b)(3)(ii) removes ERISA responsiblities from the employer. Nevertheless, ERISA allows the employer to name others as fiduciaries for the plan. Under ERISA, the employer would yet be ERISA responsible for revisiting periodically whether continuing those fiduciaries is in the best interests of the plan's participants and beneficiaries. However, the frontline ERISA responsibilities would be effectively "removed" from the employer and placed upon those others named as plan fiduciaries.

Anyone functioning as a fiduciary with respect to a ERISA plan is subject to ERISA fiduciary duties.

If the 403b plan is not also subject to ERISA (i.e., sponsored by a public school district for its employees), then what responsibilities does a delegate for plan-wide 403b compliance with the IRC have? Such a delegate would have contractual responsibilities for damages to the employer, if not also the employees as third-party beneficiaries, if the delegate accepted the allocation of responsibility and then the tax advantages were lost because the delegate did not perform under the contract so made.

In the non-ERISA 403b context, state laws would not be preempted. Those state laws would apply. The applicable state's statutory/regulatory law would need to be examined, as well as the caselaw of the state's appellate courts to determine what responsibilities that state's law impose.

[Guest Sieve]

Pay particular attention to John's 1st paragraph, especially his statement about the continuing ERISA obligation to monitor those who are performing functions under the authority of the fiduciary. That fiduciary obligation NEVER goes away under ERISA, no matter how many parties the fiduciary appoints to perform the fiduciary's responsibilities.

[ERISAnut]

Kevin1,

The DOL Field Assistance Bulletin 2007-02 may be a good reference. It is mainly stating that the employer is limiting control in order to avoid ERISA responsibility. It gives a feel for what an employer should and shouldn't do when the intent is for the plan not to be subject to ERISA.