403(b) and PEO

[52626]

501(c) maintains an ERISA 403(b) Plan ( deferral and employer contribution). they are considering a move to a PEO.

1. The PEO sponsors a 401(k) Plan

2. The PEO recommends terminating/freezing  the 403(b) and adopting the 401(k)

Nothing prevents the employer from maintaining  their 403(b) correct? The employer is not required to adopt the PEO's plan, correct?

Thoughts??

 

Thanks

 

[ETA Consulting LLC]

The 403(b) plan has several advantages over a 401(k).  Not sure what is being asked.  The "Employer" isn't required to do anything.  IF the Employer chooses to adopt on to the PEO's plan, then they would need to "adopt the PEO's plan", but that's a decision the Employer would make. 

Again, not sure what you're asking.

Good Luck!

[Bill Sweetnam]

The main question is how is the PEO arrangement to be structured.  Are the employees of the  501(c) organization going to become employees of the PEO or will they remain employees of the 501(c) organization?  The answer to that question will tell you whether the 501(c) organization has employees which can continue to contribute to the 403(b) plan or if, as employees of the PEO, they will be able to contribute to the PEO's 401(k) plan.