Non Erisa 403B TPA Needed ?

[rfahey]

I have a very small 501C3 ( not a church or religious ) that had an employee contribution only 403B plan in the past with a few different insurance and fund companies. THere are only 6 participants. They stopped all contributions in the Fall of 2008 with concern over the new rules.

Now I am considering low cost options for them to start a new "plan ".

Oppenheimer and Metlife both have a Non Erisa Plan Document for use. THey also suggest that the employer really does not need a TPA as their enrollment and distribution forms and procedures will comply with the new rules.

Your thoughts and recommendations would be appreciated.

[Guest TPADoug]

Couple of things they might want to ask or have clarified. If they plan on keeping both vendors in the plan, which vendor is going to craft an adoption agreement or plan document that represents both vendors? Also, and more importantly in the IRS eyes, will they share information for both contribution monitoring and catch up provisions, as well as compliance issues such as hardship and loan approval and monitoring. If the vendors can do these functions and agree to hold the district harmless in providing these services, then sure. If not, having an independent TPA on board to do everything from document creation to common remitting and compliance monitoring would be a good idea.

[Guest Catherine M. Peery]

[ERISA vs Non-ERISA] My understanding is that if a 501©(3) has a 401(a) Plan to which it makes employer contributions currently, it can not maintain a non-ERISA 403(b) Plan--that the 403(b) Plan would be automatically ERISA because of the employer contributions in the 401(a). Is that correct?

[MWeddell]

[ERISA vs Non-ERISA] My understanding is that if a 501©(3) has a 401(a) Plan to which it makes employer contributions currently, it can not maintain a non-ERISA 403(b) Plan--that the 403(b) Plan would be automatically ERISA because of the employer contributions in the 401(a). Is that correct?

If the amount contributed to the 401(a) plan is unrelated to whether or how much one contributes to the 403(b) plan, then the presence of the 401(a) plan is irrelevant to determining whether the 403(b) plan is subject to ERISA.

If instead the amount contributed to the 401(a) plan depends at least in part on how much was contributed to the 403(b) plan (e.g. there are matching contributions), then my impression is that many practitioners would say that one no longer fits the safe harbor for making sure the 403(b) is non-ERISA, that it is prudent to assume that the 403(b) plan is subject to ERISA. I do not believe that view is unanimous however.

[MWeddell]

http://benefitslink.com/boards/index.php?s...2&st=0&

Catherine has started a separate thread on her question here, so it makes sense for further conversation on her topic to be posted at the other thread.