Public Schools

Governmental plans have been granted a permanent moratorium on the non-discrimination rules of the Employee Retirement Income Security Act of 1974 (ERISA). This allows a school board to be selective in determining which employees will receive an employer contribution to a 403(b) plan. The employees could be a superintendent, one or more principals or other top-paid administrators. A school district could also adopt a plan that requires that the employer contribute a retiring employee’s accrued sick/vacation pay or severance pay up to certain limits. This would maximize the amount the employee can shelter in their year of separation. ADSERV can provide a plan document to a school district for this purpose.

 

Churches

A church 403(b) retirement plan must be maintained by a church or an association of churches sharing common religious bonds and convictions. The employees cannot be engaged in any unrelated trade or business. A church plan may elect to be exempt from all ERISA requirements (i.e., provisions governing fiduciary responsibilities, plan termination, vesting, funding and distributions including distributions under qualified domestic relations orders.) ADSERV can provide a plan document for a church plan.

 

Other 501(c)(3) Organizations

Organizations that are not public schools or churches but do qualify for tax-exempt status under 501(c)(3) (e.g., charities, libraries, hospitals, health and welfare agencies, etc.) may also adopt an employer contributory 403(b) plan. But these plans must be subject to all of the ERISA requirements. ADSERV can provide a plan document, offer aid in discrimination testing, assistance in meeting the safe harbor requirements of 404(c) regarding diversified investment options and employee education, which will serve to lower your fiduciary responsibilities, and assistance in filing Form 5500.