403 (b) Plans - Plan Eligibility Flashcards
Which of the following activities would not cause a 403(b) plan sponsored by a non church related IRC 501(c)(3) employer to be subject to ERISA?
a. employer mandates participation upon hire
b. employer collects and remits elective deferrals to vendor
c. employer determines whether a participant is eligible for a financial hardship withdrawal
d. employer approves participant loans
Employer collects and remits elective deferrals to vendor
To be exempt from ERISA, the plan sponsor can only have limited employer involvement. Collecting and remitting employee deferrals is limited involvement. The other actions would subject the plan to ERISA
Which of the following may cause a 403(b) plan sponsored by a non-church related IRC 501(c) (3) employer to be subject to ERISA?
a. employer provides employees with information on plan investments
b. employer allows vendors to contact participants
c. employer collects and remits elective deferrals to vendor
d. employer approves participant loans
Employer approves participant loans
To be exempt from ERISA, the plan sponsor can only have limited employer involvement. Approving plan loans is sufficient involvement to subject the plan to ERISA
Which of the following statements regarding the “meaningful opportunity” employee notice requirement is NOT true?
a. 403(b) plan sponsor may provide the written notice to eligible employees through a payroll stuffer
b. the notice which must be provided at least once per year, informs eligible employees of the opportunity to participate in the 403(b) plan
c. the notice is part of the nondiscrimination requirements for elective deferrals
d. notice must be given only to employees that are actively deferring into the plan
Notice must be given only to employees that are actively deferring into the plan
The annual notice of the right to defer must be given to all eligible employees
Which of the following statements regarding the “meaningful opportunity” notice requirement is true?
a. notice must contain any employee requirements that plan participation is contingent on
b. notice is not required to advise employees how to change for salary deferral purposes
c. notice must be given only to employees actively deferring to the plan
d. notice is part of the non discrimination requirements for elective deferrals
The notice is part of the nondiscrimination requirement for elective deferrals
The deferral component of a 403(b) plan is subject to a universal availability requirement and participants must have a meaningful opportunity to defer. This requirement is in lieu of non-discrimination requirements.
Roger is a custodian at his local church. He is paid on a part time basis and it is reflected on a form 1099-Misc. Which of the following statements regarding participation in the church’s 403(b) plan is true?
a. if the church provides Roger with health benefits then he may also be allowed to participate in the plan
b. Roger is not able to participate in the plan
c. Roger can participate in the plan for purposes of receiving employer contributions
d. Because Roger has compensation from the church he can participate in the plan
Roger is not able to participate in the plan
Independent contractors cannot participate in a 403 (b) plan. There is a limited exception for certain clergy
Which of the following
employees can be excluded from the employers 403(b) plan for purposes of receiving employer matching contributions?
a.EE who do not have more than 5 years of service with the ER
b. EE who complete less than 2000 hours of service in a year
c. EE who can be excluded without causing a violation of the IRC 410(b) coverage rules
d. EE who are under age 30
Employees who can be excluded without causing a violation of the IRC 410(b) coverage rules
Eligibility conditions can be imposed for purposes of matching or non elective contributions. These conditions cannot violate the minimum age and service restrictions and these components of the plan must pass IRC 410 (b) coverage
Which of the following statements regarding non ERISA 403(b) plan assets being subject to creditors is TRUE?
a. participant loan does not need to be repaid if the participant has declared bankruptcy
b. general creditors may still have some access to a participant account under state law prior to filing for bankruptcy
c. non ERISA 403(b) accounts are protected from bankruptcy due to state bankruptcy laws
d. assets are protected from creditors in the event of individual bankruptcy, provided the participant’s account does not exceed 1 million
General Creditors may still have some access to a participant account under state law prior to filing for bankruptcy
Federal bankruptcy laws protects assets from creditors. If and individual has not filed for bankruptcy, then general creditors may be able to access assets pursuant to state law
The elected Superintendent of Public Instruction receives W-2 wages and must qualify for the position with a specialized background in the field of education. The superintendent would be eligible to participate in a 403 (b) arrangement
True
False
True
Participation in a 403 (b) is restricted to employees of eligible employers. Employees of a public school system are eligible if they are involved int the day to day operations of the school. Generally, a reliable measurement of employment status is whether the individual receives wages reported on the W-2
IRC 403 (b) requires a plan to prohibit plan assets be available to the creditors of an employee
True
False
False
There is nothing in IRC 403 (b) that requires a plan to prohibit assignment or alienation; that requirement is in ERISA. A non ERISA plan does not have protection from creditors under federal law. It may however have protection under state law
A condition of satisfying the non discrimination standards requires an employer provide a meaningful opportunity to participate, which must include an annual written notice to eligible employees
True
False
True
Meaningful opportunity must include ability to participate, make deferral election changes and a notice annually the eligibility to participate. This can be satisfied though announcements in employer publications, group meetings, initial enrollment packages stuffers with paychecks. Email is reasonable communication
