2 plans - one non-ERISA and one ERISA

[cpc0506]

A prospective client has just approached us to handle their 403b plan.  As it turns out, they are running two plans: a non-ERISA plan that is a deferral only plan and an ERISA plan that holds only the employer contributions.  We have never seen a set-up like this.  Has anyone ever encountered this before?

Does it matter if the Employer contribution is a non-elective versus a matching contribution? 

If anyone can provide guidance, I would appreciate it. 

[A Shot in the Dark]

The set up of 403(b) plan to hold employee deferrals and 401(a) plan (qualified plan) to hold employer contributions for non profits has been around for as long as ERISA has been around.

The 403(b) Plan is not required to pass the standard compliance testing (adp testing, etc).  Plus, there is not 5500 filing and other administration tasks required for the 403(b) Plan.

[PensionPro]

20 hours ago, cpc0506 said:

Does it matter if the Employer contribution is a non-elective versus a matching contribution? 

If you make matching contributions to another plan then your deferral-only 403(b) plan may be subject to ERISA.  See DOL Advisory Opinion 2012-02A.

[Patricia Neal Jensen]

All correct.  It can work as long as the ERISA plan does not contain ANY provision which is contingent on activity in the Non-ERISA Plan.   A Non-Elective 401(a) plan (employer non-elective) could sit alongside a Non-ERISA deferral plan.  A Matching 401 plan would cause the deferral plan to be ERISA. (The matching would depend on saving in the deferral plan.)