Employer Paid Plan Fees - ERISA 403(b) Status

[RPP2001]

If an employer begins to pay the related 403(b) fees, does that employer involvement cause the plan to fall under ERISA status to shift the plan from non-ERSIA 403(b) to ERISA 403(b)?

[Carol V. Calhoun]

Most likely yes. This is not all that different from an employer contribution, which would clearly shift the plan to ERISA status. 

[QDROphile]

While I agree with the conclusion, do you distinguish payment of settlor expenses, such as establishment of the plan and adoption of a plan document?  

[Carol V. Calhoun]

Yes, I would.  It would be impermissible to pay settlor fees from plan assets, so if the DOL used those payments as indications of an ERISA plan, it would make it impossible to have a non-ERISA plan.  I was interpreting "related 403(b) fees" as meaning fees associated with the management of assets under the contract itself.

[QDROphile]

So do you buy into the DOL sop generally, and it is business as usual after the 403(b) tax regs in determining whether or not a 403(b) plan is subject to ERISA?

[Carol V. Calhoun]

Well, there is always the question of whether the DOL is right in saying that 403(b) plans need not be ERISA plans, even if the employer has a written plan document that complies with IRS requirements.  I suppose a participant lawsuit could argue otherwise.  But barring that, compliance with the DOL's enforcement position seems safe.