Two 403(b) plans - effective availability /anti conditioning rule

[Guest Cher]

I work with nonprofit that has a non-ERISA 403b plan for only deferrals in excess of 5% of pay.

They also have an ERISA 403(b) plan for deferrals that are matched (i.e. below 5% of pay).

Some think this is impermissible re the anti-conditioning rule in the regs as a failure to meet the effective availability requirement. I guess this is because in order to defer into the non-ERISA plan you have to defer over 5% of pay - otherwise all your deferrals go into the ERISA 403b plan. I know this 2-plan strategy is common to TIAA CREF plans and many others.

What do you think?

[J Simmons]

Since the match throws you into the ERISA arena, wouldn't it be simpler just to have the one ERISA plan that allows deferrals and the match than to have this bifurcated plan approach? Having the second plan doesn't relieve the ER of having to observe ERISA in the matching plan.