Is Your Nonprofit Meeting the 403(b) Requirements?

Posted on Wednesday, August 23, 2017

Many nonprofit organizations offer retirement plans for their employees.  For many years, 403(b) plans did not have as many requirements 401(k) plans.  This is no longer the case, and there are several regulations that nonprofit organizations need to make sure that they are following related to their 403(b) plans.

A 403(b) plan is a defined contribution plan established under the Internal Revenue Code for employees of 501(c)(3) organizations and certain employees of public schools and ministers.  Prior to 2007 403(b) plans did not have as many regulations as 401(k) plans; however, the Department of Labor issued new regulations on November 16, 2007 for 403(b) plans that are covered by ERISA (The Employee Retirement Income Security Act of 1974).  ERISA is responsible for setting minimum standards for most retirement plans; however, some 403(b) plans may not be subject to ERISA regulatory compliance.*  Plans that do not have employer contributions, have minimal administrative involvement by the plan administrator and employee participation is voluntary are not subject to ERISA.  All three of these criteria must be met in order for the plan to avoid ERISA requirements.

If the plan is subject to ERISA, it must meet the following requirements.

*If you believe your organization’s 403(b) plan is not subject to ERISA, we strongly recommend that you contact an attorney well-versed in ERISA as opposed to making the assessment yourself.

Posted by: Carrie Minnich, CPA

Posted in Mission Minded Nonprofits

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.

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