Do the new regulations require the employer sponsoring a 403(b) plan to engage a third party administrator?
A. No. The regulations do not impose a requirement to hire a third party administrator. However, the new regulations do place a great deal of responsibility on the employer. Therefore, if the employer is not able to oversee the plan and the investment vendor does not accept that responsibility, the employer may want to hire a third party administrator, advisor, or consultant for assistance. This is particularly true of a tax-exempt employer that wishes to avoid having a deferral-only plan be subject to ERISA. Q. If a tax-exempt employer sponsors a deferral-only 403(b) plan, will the written plan requirement compromise its ERISA exemption? A. No. If an employer satisfies the safe harbor requirements the DOL has set out (DOL Reg. ยง2510.3-2(f)), the DOL will not consider a tax-exempt employer sponsoring a deferral-only plan as an ERISA plan. Concurrent with the issuance of the regulations, the DOL issued FAB 2007-02, in which it provided guidance under which an employer could comply with
