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Consequences of Adopting an ERISA 403(b) Plan

Q: Suppose a financial organization maintains a 403(b) plan document that is intended for use by an ERISA 403(b) plan. If the plan talks about being subject to the ADP test and certain nondiscrimination rules:
1.  may a governmental employer adopt such a document, and
2.  could that ever subject the governmental plan to provisions under the plan document, such as the ADP test?
A: The mere adoption of an ERISA plan document will not subject the governmental employer to the ADP nondiscrimination requirements. This is their chance to make it right! The new pre-approved 403(b) plan documents and their remedial amendment period (RAP) are right around the corner. The restatement needs to be done by March 31, 2020, and will be made retroactive to Jan. 1, 2010. This employer basically could self-correct for most of the items that are in their current plan back to 2010. The only year in question would be 2009. The ADP nondiscrimination test is not really important here since it doesn’t apply to any 403(b) plan. The real question is whether the document contains the universal availability nondiscrimination language and whether it complied with that requirement or any other 403(b) specific rule. They also should look to the year 2009 and see what policies and procedures they had in place so that they can receive reliance back to 2009.