ERISA 403b for a public charter school

[gregburst]

I met with a charter school that has had a 403b plan for about 10 years. They've always made matching contributions; and they've always considered themselves to be an ERISA plan. Their document is completed as such, and they've always filed 5500s as such.

But as a public school, I believe they should be Non-ERISA. They stated that they recently reached this same conclusion themselves, and they mentioned it to their current provider. The provider told them that since they had filed as an ERISA plan for more than five years, they cannot reverse course now and be a Non-ERISA plan.

I can't find any rule about five years. Are they stuck as an ERISA plan? Or is there some action they need to take to become a Non-ERISA plan?

[jpod]

The plan is either an ERISA plan or it is not an ERISA plan. There is no 5-year rule, and there is no ability for a governmental plan to elect ERISA status like a church plan can. I am always amazed at the stuff that vendors/providers will make up.

[QDROphile]

I agree on both counts. I only wish more incompentent vendors/provider got punished for the usually arrogant incompetence. It may be a good idea to file a final Form 5500 -- not to fill everything out, but just to get it shut down in the system. Also, the terms of the plan that are there because of the mistaken understanding about ERISA continue in effect until amended.

[rcline46]

It may be a charter school, but is it a PUBLIC school, or a FOR PROFIT school. That is the real question. Many charter schools operate like private schools, so make sure the facts are right.

[mbozek]

If the charter school is a public school then it is not subject to ERISA regardless of whether it filed 5500, etc because ERISA only applies to non profit and profit making employers. Since there is no statutory authority under ERISA to regulate a governmental entity, a public entity cannot voluntarily consent to be regulated under ERISA.

Whether the charter school is a government instrumentality is another question. Also it is possible for a governmental entity to be a 501©(3) organization.