Anyone heard of Limited Involvement Erisa Exemption?

[Guest dannilamb]

Has anyone heard of the Limited Involvement Erisa Exemption? I know of someone who works at a non-profit center and has the following verbage in their policy:

Beginning with the first month after the completion of two years of continuous employment, the center will increase by 5% the monthly pay of all employees who have selected a qualfied plan and who have entered into an appropriate salary reduction agreement. The salary reduction agreement must result in at least the amount of the increase going to fund the retirement annuity.

Is this legal wording on the part of the center - assuming they have a non-Erisa plan or does it involve some discrimination??

F.Y.I. - The center has written their policy and leaves individual 403(B) account set-up to the employees themselves.

[BeckyMiller]

I will give you the regulation that they are trying to fall under. It is ERISA reg. 2510.3-2(f).

I can't tell you whether their approach of granting an increase in pay for persons who choose to save would meet the conditions of this regulation. My first impression is that it would be considered to be an employer contribution that would bring them outside of this regulation. QUERY: What happens to the employee's salary if they later cease contributing to their plan?