Advisor Services for a nonERISA 403(b)

[Guest AbbyP]

Can an individual provide the following services to a Non-ERISA 403(b) plan, and remain in compliance?

• Provide guidance regarding the plan so as to ensure it maintains its non-ERISA status and comply with applicable ERISA laws and the tax code. In general, serve as the Administrator for the 403(b) plan
  
• Serve as an investment advisor to plan participants under a no-fee arrangement, but be paid commission for trades
  

Thanks

[Guest AbbyP]

Based on the explanation of what makes a 403(b) a non-ERISA plan, I am thinking this is OK ( requirements here http://www.dol.gov/ebsa/regs/fab2007-2.html ) . But I wanted to be sure if the advisor can get commissions from trades and serve as administrator for the plan

Thanks

[mbozek]

Based on the explanation of what makes a 403(b) a non-ERISA plan, I am thinking this is OK ( requirements here http://www.dol.gov/ebsa/regs/fab2007-2.html ) . But I wanted to be sure if the advisor can get commissions from trades and serve as administrator for the plan

Thanks

The answer depends on the type of advisor. If the advisor is a regestered rep licensed under series 7 he can only collect commissions. Whether he can act as a plan administrator depends whether the brokerage firm he works for would allow him to also collect fees as the plan admin. Few brokerage firms would allow such an arrangement b/c the broker would be at risk of acting in a conflict of interest selling products to the plan participants while acting as a plan representative which could put the firm at risk. Need to check state laws b/c most state do not regard 403b plans as a retirement plan subject to fiduciary rules.

If he is an RIA he cannot collect commissions from trades and can only represent the plan as a fiduciary for which he is paid fees. Check his agreement with the plan to see who he represents and what fees he can collect. If he is a fiduciary to the plan he cannot collect commissons from participants.

[Guest AbbyP]

Thanks mjb