ER Contribution outside Plan - ERISA 403(b) Status

[IhrtERISA]

ISSUES: Employer provides in its employee handbook "Employer will contribute 1% of employees bi-weekly pay to the employee as an incentive to participate"

QUESTION: Could this lead an IRS auditor to determine that the 403(b) plan is subject to ERISA?

BACKGROUND: Employer is under IRS audit of its 403(b) and 457 (b) plans. There are a number of compliance issues. Employer never maintained a 403(b) plan document, so we are hoping to use to "paper clip" approach, which would involve providing Employee Handbook with master annuity contract. 

Employer did not believe it was operating an ERISA plan, although vendors have some concerns about Employer's "discretionary authority." We are contemplating advising the Employer to apply for relief under DFCP for 5500s (which have never been prepared) before its too late.  The plan has been in existance since 1981...

 

 

 

[ETA Consulting LLC]

The IRS deals with the tax code issues while the DOL deals with "ERISA" issues; so it's not within the IRS's purview to determine ERISA status. 

Good Luck!

 

[IhrtERISA]

Thank you. But presumably it would result in the IRS contacting the DOL...

[ETA Consulting LLC]

It's not their policy to do that. If the IRS comes across something that they know the DOL will zing you on, they're no protocols in place to contact them. 

This is merely something explained to me from a colleague that previously worked for the DOL (and I was surprised when they said it). 

Good Luck!