Personnel Manual and Plan Document differ in eligibility criteria for 403(b)(9) non-electing church plan

[KaJay]

An employer's personnel manual (dated 1998) states all employees are eligible to participate in the 403(b) plan.

The same employer's plan document (2009) provides a default eligibility for employees working at least 20 hours per week.

For employees working for the employer 2009 and beyond, which document governs participation eligibility?

TIA for your responses.

[david rigby]

For almost all situations, the plan document is superior to any summary of it.  But different descriptions could imply there are other documents worth looking for, such as a plan amendment dated somewhere between your 2 dates.  If you found such intervening document, it would explain the difference, but not alter my first sentence.

[QDROphile]

The plan document is superior with respect to plan operation, meaning that there may be no plan problem  with the exclusion. Other documentation, such as an employment contract might give an individual some right to participate and exclusion would breach the contract and create liability for the employer.  The role of the manual in establishing the employment terms must be considered. That is why offer letters usually refer to benefit participation “in accordance with the terms of” the benefits plans.

[KaJay]

There are no employment contracts or offer letters, just a statement that "all employees are eligible to participate in the retirement plan" in a section of the personnel manual (1998) - of which I believe has just sat dusty on a shelf and not referred to since its creation 20+ years ago.

The only other mention of eligibility is within the 2009 plan document.There have been no amendments between 1998 and 2009. 

Based on the responses from david rigby and QDROphile, it seems as though there may be a stronger argument to use the plan document's criteria for eligibility.

 

[QDROphile]

Every employee has an employment contract, one way or another.  Determining and disputing the terms of employment are what keeps a lot of employment lawyers in business.

Of course you have to use the plan terms for participation in the plan.  To do otherwise would create direct problems with plan documentation and operation.  I observed that the failure to keep the personnel manual consistent with the plan terms is a potential source of liability that is not directly related to the operation of the plan. If the organization has an employment dispute with an employee, it is likely that the employee's lawyer will  be interested in the personnel manual.

Many employers are surprised to find that ERISA is their friend in employment disputes because it is often a shield against nuisance employment claims, such as eligibility for benefits or severance compensation.  Your caption suggests that ERISA is not of service to this organization, so the employment law concerns are relevant.

 

[KaJay]

Thanks for all of your responses!

[Ellie Lowder]

If this is a plan sponsored by a church or a QCCO, the universal eligibility rules do not apply.  

[KaJay]

Thanks for your response, Ellie. I agree that the UA rule does not apply to churches and QCCOs. This is not about UA. The church has a responsibility to offer plan participation to those that are eligible for deferral or any other type of contribution. I can understand your confusion with the standard UA language of "20 hours per week..." as it parallels the 20 hours per week eligibility criteria within the church's written plan doc. For this particular plan, it has to do with a default class for participation specified in the plan doc that all churches in the plan are subject to if they do not specify otherwise in their adoption agreement. Thanks again for taking the time to read and respond to my post.