403(b) - ERISA Plan or Not

[HarleyBabe]

I have recently taken over a client that has a 403B and a SEP, yuk.

I am not versed that well in either but in regards to the 403(b), currently held at T Rowe, I am trying to determine whether this is a true ERISA plan or not. The CPA guessed when completing a service agreement with T Rowe and put no however that wasn't based on any real knowledge.

The plan is deferral only. It again is offered through T Rowe where by the participants can pick from a group of funds. All our eligible and that is all that is known.

There is no plan document nor has there ever been.

This actually all came to light as I was trying to determine information on the SEP plan which those questions go in another forumn I suppose although if anyone knows the answer to the easiest way to amend a SEP document that hasn't been touched since the early 90's and what exactly I need to provide participants each year and if I need to go through a correction program because no real documentation was ever kept, that would be great please reach out to me.

Actually I have all the same questions for each plan. Just not my cup of tea and need direction and confirmation from the research I have done.

Thanks

[Guest KennyH]

It has been awhile since I read the rules, but IIRC, the determination of whether the 403(b) plan is an ERISA plan hinges on the type of employer and the level of control the employer exerts over the adminstration of the plan. i.e. if they are 100% hands off, it likely isn't covered. If they are involved in the administration (even just doing things like helping adminster QDROs or hardship withdrawals) then it is covered.

There were quite a few articles on this a couple years back when the 5500 reporting requirements changed (or maybe I am remembering the rules about 5500 reporting requirements and not ERISA v non-ERISA - sorry if that is the case).

[mbozek]

I have recently taken over a client that has a 403B and a SEP, yuk.

I am not versed that well in either but in regards to the 403(b), currently held at T Rowe, I am trying to determine whether this is a true ERISA plan or not. The CPA guessed when completing a service agreement with T Rowe and put no however that wasn't based on any real knowledge.

The plan is deferral only. It again is offered through T Rowe where by the participants can pick from a group of funds. All our eligible and that is all that is known.

There is no plan document nor has there ever been.

This actually all came to light as I was trying to determine information on the SEP plan which those questions go in another forumn I suppose although if anyone knows the answer to the easiest way to amend a SEP document that hasn't been touched since the early 90's and what exactly I need to provide participants each year and if I need to go through a correction program because no real documentation was ever kept, that would be great please reach out to me.

Actually I have all the same questions for each plan. Just not my cup of tea and need direction and confirmation from the research I have done.

Thanks

Under IRS regs all 403b plans have been required to be in writing since 2009 regardless of whether the plan is subject to ERISA. The only exception are plans that ceased to accept contributions prior to 2009. Plan sponsor need to adopt a 403b plan that meets IRS regs ASAP.

Q Why is TRP still servicing this plan without a written document?

Q2 Who is the plan administrator? Is it TRP?

[John Feldt ERPA CPC QPA]

No document - perhaps it's a church?

[mbozek]

No document - perhaps it's a church?

Its a possbility athough I doubt it because the OP refers to plan exempt from ERISA which implies a salary reduction plan for a NP since church plans with salary reduction are automatically exempt.

I dont understand the need for SEP /403b dual plans because there is a single 415 limit for both plans under the IRC which means that the employer contributions and employee deferrals could be contributed to the 403b plan. Only reason to have SEP is if plan sponsor wanted to to avoid 5500 reporting on employer contributons applicable only to NP.

[HarleyBabe]

thanks all. Yes I will be changing this combination 403(b) plan an Sep plan quickly. I can put the document together for the 403(b) plan but what about whether it's ERISA or not. I just don't know what to do about that and it makes a big difference on 5500 filings or not. Will I have to go through a correction program since there has never been a document if it's non Erisa?

Any direction on where to go looking for the SEP rules other than the IRS site.

I'm assuming the reason for both of these were so that no forms had to filed and to save on admin.

[John Feldt ERPA CPC QPA]

The IRS has promised a correction option for the 403(b) plans that missed their document deadline, but that promise is at least a couple years old, and no such option exists yet. So don't hold your breath. It would be a good idea to have a document adopt now, but I would probably leave out any retroactive language until such time that the IRS really does allow a 403(b) document failure to go in under VCP.

As for deferral only, there's a DOL FAB out there that talks about this issue.

SunGard has a brief summary here: http://www.relius.net/News/TechnicalUpdates.aspx?ID=502