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Erisa Rules For 403b In Sacramento
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Sacramento
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US-001HB
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FAQ
When is a 403(b) plan subject to ERISA? All 403(b) plans are subject to Title I of ERISA unless an exemption applies.
ERISA restricts certain actions related to how benefit plans are designed and administered. For example, it limits the types of investments that retirement plans can make, imposes fiduciary duties on plan administrators, and mandates specific reporting and disclosure requirements.
In general, ERISA does not cover plans established or maintained by governmental entities, churches for their employees, or plans which are maintained solely to comply with applicable workers compensation, unemployment or disability laws.
403(b) plans sponsored by 501(c)(3) organizations (such as tax-exempt hospitals and charitable organizations) are generally subject to ERISA but may choose non-ERISA if they meet specific requirements. In other words, they do not automatically qualify to be non-ERISA.
The top recordkeepers for ERISA 403(b) plans are TIAA, Lincoln Financial Group, Newport Group, VALIC and Principal Financial Group. For non-ERISA plans, the top five are Security Benefit Life, Voya Financial, VALIC, AXA and Fidelity Investments.
A: All 403(b) plans are regulated by the Internal Revenue Service (IRS). The IRS defines who may participate in the plan and the plan's permissible investment options.
If you administer a 403(b) plan you should be familiar with the term “universal availability”. This concept means that, as a general rule, all employees must be allowed to make elective deferrals into the plan immediately upon hire.
You won't be able to open a 403b on your own 403b plans are specific to these employment types andMoreYou won't be able to open a 403b on your own 403b plans are specific to these employment types and require employer sponsorship.
One key exception is the ADP test that normally applies to salary deferrals. As a trade-off to the universal availability requirement (described above), 403(b) plans are not required to pass the ADP test. This allows any highly compensated employees to maximize their deferrals.
First, a 403(b) plan may potentially offer a plan participant more flexibility: You can opt out of participating or change your contributions with each paycheck if you like, whereas a 401(a) may have mandatory contributions set by your employer. On the other hand, a 401(a) plan has a much higher contribution limit.