The Employee Benefits Security Administration says tax-exempt employers can take many steps to run a 403(b) plan without subjecting the plan to the pension plan requirements in Title I of the Employee Retirement Income Security Act.
EBSA, an arm of the U.S. Department of Labor, has published that interpretation of the law in Field Assistance Bulletin 2007-02.
The bulletin deals with 403(b) tax-sheltered annuity plans.
In 1964, the Labor Department created “safe harbor” regulations that enable employers to keep ERISA Title I pension plan rules from applying to 403(b) plans. If employees are the sole source of a 403(b) plan’s funding, the plan can stay outside the scope of the ERISA pension plan rules, according to Robert Doyle, the EBSA official who wrote the field assistance bulletin.
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Earlier this month, the department released new 403(b) regulations that make administration of 403(b) plans more flexible.