This tip is taken from the article “Impact of 408(b)(2) Guide on 403(b) Advisors,” by Kimberly Flett and Jeannine Souders, which originally ran on Sept. 23, 2014.
It’s important to distinguish the difference between an ERISA and non-ERISA plan. A basic definition of ERISA vs. non-ERISA includes the employer’s involvement.
In an ERISA plan, an employer chooses the investment options, controls the deposit and timing of employee contributions and may also provide an employer matching contribution.
In a non-ERISA plan, an employer is not involved except in compliance activities. The employee chooses the investments and controls the deposit and, following determination of eligibility, the withdrawal of funds.
Governmental plans are exempt from ERISA coverage, while church plans and related church-organizations plans (in general funded by church contributions and revenues) are exempt from ERISA unless an affirmative election is made to be subject to ERISA.