“But what about plans that are not subject to ERISA, such as those for public school districts and churches? I hear that some states have fiduciary laws of their own, but which states and how many?”
Michael A. Webb, vice president, Retirement Practice, Cammack Retirement Group, answers:
This is an excellent question, but unfortunately one for which there is no good answer. The reason is the issue of state fiduciary law is twofold: there is the question of a) whether such law exists in each state and b) whether such law applies to 403(b) plans that are not subject to ERISA. Thus, in order to respond to your question, one would have to research a) the laws in all 50 states to locate any fiduciary law, and b) research the applicability of such law, including all relevant state court cases dealing with such law, to 403(b) plans. Given the combined length of all state statutes, and the myriad of court cases, this would truly be a tremendous undertaking!
Never mind that state fiduciary laws, when they exist in a fashion that COULD possibly apply to 403(b) plans, often are written in the context of a trust or estate, and, as you may be aware, trusts are rarely used in 403(b) plans. Thus, it becomes a matter of how a particular law, or a judge applying such law, would define a trust in this context. Again, multiply that interpretation by other potential interpretations in all 50 states, and you can see how this becomes an impossible task.
Thus, the Experts recommend, if you are a non-ERISA plan in a particular state (keeping in mind it is possible that other state laws can apply to the plan sponsor as well depending on where active/terminated/retired plan participants reside), you should seek the advice of benefits counsel well-versed in such matters to determine the possible applicability of state fiduciary law.
NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.
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