Non-ERISA Plans
403(b) plans sponsored by 501(c)(3) employers are generally exempt from Title I of ERISA if they meet certain "safe harbor" regulations.* Do you know what the safe harbor regulations are? If you're not absolutely certain, your plan may inadvertently end up subject to ERISA, including its fiduciary and IRS Form 5500 reporting requirements. PlanConnect®, the new standard in plan administration, provides the services necessary to ensure non-ERISA plans stay that way. Based on our experience, we've provided some tips on what you should do to keep your plan exempt from ERISA.
Maintaining Your Plan's ERISA Exemption - Some Tips
Here are some of the steps you need to take, and the steps you must avoid to make sure your plan doesn't fall subject to ERISA.
| What to Do…and Not Do | |
| Do: | Ensure employee participation is completely voluntary. |
| Do: | Make all rights under the plan enforceable solely by the employee or the employee's beneficiary(ies). |
| Do Not: | Directly handle discretionary administrative function; this means you should not directly review and approve:
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| Do: | Allocate discretionary determinations to an annuity provider, who may, in turn, hire a third party administrator. |
| Do: | Refuse to include investment products in your plan that would cause you to lose the safe harbor exemption-e.g., a product requiring you to make discretionary decisions on transactions, such as qualifications for hardship withdrawals. |
| Do Not: | Authorized a change of investment vendors and/or unilaterally move funds from one vendor to another. |
Alternatives…and Data Aggregation by PlanConnect®
You could always require your plan's investment providers to assume responsibility for authorizing and approving transactions and distributions. But that would mean they’d have to share information directly with one another—something they might be reluctant to do because of privacy concerns.
Another alternative is PlanConnect®'s data aggregation services. PlanConnect® can be the single source of data for your plan; product providers can use PlanConnect® for discretionary decisions, such as eligibility determination and authorization of requested transactions-giving you the essential support you need to ensure that your plan does not fall subject to ERISA.
*403(b) plans sponsored by governmental employers—including public school districts, public universities, district or county hospitals, and some charter schools that are governed by state agencies-are automatically exempt from ERISA.
