Addition of salary deferral only 403(b) program

[smm]

Many years ago, a 501©(3) entity sponsored a 403(B) plan with employer contributions. There was a document and the plan complied with all of the applicable regs and rules. The plan was frozen and no contributions have been made to the plan for years. Employer has since adopted a 401(k) plan which is running nicely. Employer wants to allow employees to make deferrals to a 403(B) program. Primary reason is that some employees have asked to be able to. Second reason is that some employees get refunds of their deferrals to the 401(k) plan each year because of ADP testing. 403(B) would be open to all, employees can select vendors, etc., etc.....Is the "new" 403(B) program exempt from ERISA (assuming we meet all of the requirements) or is it somehow subject to ERISA because of the old plan or some other reason. Thanks

[MWeddell]

Sure, the 403(B) program could be organized as not subject to ERISA. See Labor Reg. 2510.3-2(f) for a description of the very limited role an employer must take. Having a previous ERISA 403(B) plan or a current 401(k) plan shouldn't affect whether the new 403(B) arrangement is subject to ERISA.

Make sure payroll understands that both 401(k) and 403(B) deferrals apply toward the annual dollar amount limit but that the make-up election applies only to the 403(B) arrangement. Also, make sure that 403(B) vendors understand the situation as well, because they'll be enforcing individual deferral limits too.