Limited Employer Involvement Safe Harbor

Under certain circumstances, a 403(b) plan that meets certain criteria may qualify for a safe harbor exemption and, therefore, not be subject to ERISA. 

In order to fall under the “limited employer Involvement safe harbor,” employer involvement in the plan must be limited as described in Department of Labor regulations. 

For example, to qualify for the safe harbor, employers are not allowed to:

• contribute to the plan; or 
• make discretionary determinations in administering the plan, such as: 
  • processing distributions; and
  • authorizing plan-to-plan transfers or making determinations of eligibility for loans or hardship distributions.

In addition, participant involvement in the plan must be voluntary (i.e., participants elect to participate in the plan, instead of being automatically enrolled by the employer).