The employer may also limit funding media or products available to employees, or annuity contractors who may approach the employees, to a number and selection designed to afford employees a reasonable choice in light of all relevant circumstances. A 403(b) plan does not fail to comply with the “safe harbor” merely because the employer maintains a separate plan qualified under Code section 401(a).You represent that several of your clients are tax-exempt organizations with 403(b) plans that they treat as not covered by Title I of ERISA by reason of the “safe harbor” at 29 C. Nor does compliance with the safe harbor preclude an employer from taking employee participation in the 403(b) plan (including salary reduction contributions) into account in ensuring that employer contributions to the other plan meet tax qualification requirements in the Code.The new regulations will require employers to play such a key role in plan administration and compliance that virtually no 403(b) plans (other than governmental and church plans) will be able to qualify as exempt from ERISA — even if the only contributions to those plans are voluntary employee contributions.The new regulations also require that the plan sponsor have either service agreements or “information sharing agreements” with any vendor that will hold or receive plan assets.Even plans that are not subject to ERISA will be required to have accurate and complete written plan documents.Those plan sponsors that do not have written plan documents will find this development to be a demanding task.The hazard of fire and explosion arising from the storage, handling or use of structures, materials or devices. Conditions hazardous to life, property or public welfare in the occupancy of structures or premises. Fire hazards in the structure or on the premises from occupancy or operation. Matters related to the construction, extension, repair, alteration or removal of fire protection systems. Conditions affecting the safety of fire fighters and emergency responders during emergency operations.(a) 101.2.1 Appendices. Be inconsistent with, or in conflict with, regulations of the federal occupational safety and health administration or the hazardous materials regulations of the hazardous materials regulations board of the federal highway administration, United States department of transportation, or the public utilities commission; 4. Establish a health or safety standard for the use of explosives in mining, for which the federal government through its authorized agency sets health or safety standards pursuant to section 6 of the "Federal Metal and Nonmetallic Mine Safety Act of 1966," 80 Stat. The administrative, operational and maintenance provisions of this code shall apply to:(a) Conditions and operations arising after the adoption of this code. (3) 102.3 Minimum conditions of occupancy.(a) 102.3.1.
Ensuring compliance will require employers to compile, maintain, and coordinate scores of data for which they were not previously responsible.
It is the view of the Department, however, that conditioning employer contributions to the separate pension plan on the employee making salary reduction contributions to the 403(b) plan would be inconsistent with the limited employer involvement permitted by section 2510.3-2(f)(3) of the safe harbor, and would also conflict with the requirement in section 2510.3-2(f)(1) that employee participation in the 403(b) plan be “completely voluntary.” This letter constitutes an advisory opinion under ERISA Procedure 76-1, and is issued subject to the provisions of that procedure, including section 10 thereof relating to the effect of advisory opinions.
This letter relates solely to the application of provisions of Title I of ERISA, and does not express any views regarding whether the plans about which you request guidance comply with the provisions of sections 401(a) or 403(b) of the Code.
A 403(b) plan “established or maintained” by an employer that is a private sector tax-exempt organization generally is a “pension plan” within the meaning of section 3(2) of ERISA and covered by Title I pursuant to section 4(a) of ERISA. The “safe harbor” provides that a program for the purchase of annuity contracts or custodial accounts in accordance with provisions set forth in section 403(b) of the Code and funded solely through salary reduction agreements, or agreements to forego an increase in salary, are not “established or maintained” by an employer under section 3(2) of the Act, and, therefore, are not employee pension benefit plans subject to Title I, provided that certain conditions are met.
The phrase “establish or maintain” is not defined in ERISA. There are four general conditions: (1) participation of employees is completely voluntary, (2) all rights under the annuity contract or custodial account are enforceable solely by the employee or beneficiary of such employee, or by an authorized representative of such employee or beneficiary, (3) the involvement of the employer is limited to certain specified activities, and (4) the employer receives no direct or indirect consideration or compensation in cash or otherwise other than reasonable reimbursement to cover expenses properly and actually incurred in performing the employer's duties pursuant to the salary reduction agreements.
Questions regarding the application of this phrase to 403(b) plans funded entirely with employee salary deferrals prompted the Department of Labor in 1979 to issue a “safe harbor” regulation at 29 C. The safe harbor allows the employer to engage in a range of activities to facilitate the operation of the program.