An employer offers a 403(b) non-ERISA plan to her employees. Its benefits administrators are aware of the need to prevent compliance violations such as borrowing more than $50,000 and taking distributions while still employed and under age 59½. But other than that, they are unsure what fiduciary duties must be fulfilled.
In addition, since the plan is a non-ERISA plan, it is unclear to them whether the employer has the legal and fiduciary responsibility to address investment fees, investment performance, etc. — as would be the case if it were an ERISA plan.
Since ERISA does not apply, state laws would be the only other source of any potential fiduciary responsibilities. Such laws vary from state to state; in some states the law assigns fiduciary responsibility to the 403(b) plans of public education employers, but in others it does not. Thus, an employer should be aware of the laws in the specific state of where it is based.
Note that if the employer is a 501(c)(3) employer — and not a public education employer — it would need to maintain a "hands off" posture in order to keep the 403(b) plan a non-ERISA plan.
Editor’s Note: ERISA Tips is a feature provided with you in mind — to make the newsletter more useful to you! If you have any content for ERISA Tips or the 403(b) Advisor that you would like to contribute or suggest, please contact John Iekel, editor of the 403(b) Advisor, at [email protected].
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