A 403(b) plan (written variously as a 403b or 403 b plan) is a retirement account for certain employees of public schools and tax-exempt organizations.
A 403(b) plan (written variously as a 403b or 403 b plan) is a retirement account for certain employees of public schools and tax-exempt organizations. Participants include teachers, school administrators, professors, government employees, nurses, doctors, and librarians. Religious ministers may also participate in these plans. Note, however, that there’s a special plan type—a 403(b)(9)—that’s designed specifically for employees of religious institutions.
ERISA 403(b) Plans
ERISA organizations are subject to the rules promulgated by The Employee Retirement Income Security Act of 1974 (ERISA). This Act identifies reporting requirements, fairness procedures, and fiduciary requirements that plan sponsors and other fiduciaries must follow when setting up a retirement plan. These requirements are considered “best practice” for all organizations; however, these requirements do not directly apply to Non-ERISA Plans.
The primary functions of ERISA include:
Requiring the disclosure of financial and other information concerning the plan to Participants and their beneficiaries;
Establishing standards of conduct for fiduciaries; and
Providing for appropriate remedies and access to the federal courts.
NON-ERISA 403(b) Plans
Non-ERISA plans are those 403(b) plans that involve voluntary plan participation only. In other words, the employer is not contributing. Another parameter around this distinction is that all Church Plans are considered Non-ERISA.
Therefore, if your organization is a church, you want to ensure that you have a 403(b)(9) Church Plan. If your organization is not a church, and makes plan contributions of any kind (also known as “matching”), your retirement plan falls under the ERISA oversight rules. We hasten to say, that the ERISA regulations are very informative and add a high protection value to either a 403(b) or 401(k) Plan.