(b)lines Ask the Experts – Can a Church Have Two 403(b)s With Two Different Vendors?

“A church has an existing 403(b) plan with one insurance company providing the investment options.
By PS

“This plan covers two pastors. Pastor 1 does not want to leave this plan and wishes to continue his contributions to the current plan. Pastor 2 wants to start a new 403(b) with a separate 403(b) plan provider. I know he cannot move his money from a prior plan over to his new plan unless the prior plan has an in-service distribution provision. Main question is: Can the church have two separate plans with two separate vendors?

 

Stacey Bradford, with Groom Law Group, answers:

 

Assuming these pastors are church employees, the church, as the employer, may have two separate 403(b) plans, one for each pastor at different vendors, but it could also have one 403(b) plan with two different investment options. Whether a participant can transfer from one investment option to another will depend on the terms of each investment option. Also, although a church plan is not subject to the Employee Retirement Income Security Act (ERISA) (provided it has not made an election to be), its terms should still be stated in a written plan document that should be followed. Also, it is important to make sure the plan document fits a church plan as opposed to an ERISA plan.

 

 

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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