Plans for Nonprofit Employers

The nonprofit sector of the economy, including hospitals, charities, churches and religiously affiliated entities, and schools and universities, continues to grow by leaps and bounds.  Frost Brown Todd is pleased to have many clients that are nonprofit employers. In many respects, nonprofits have the same employee benefit plans and employee benefit compliance issues as their for-profit counterparts. In other respects, however, nonprofit employers have employee benefit plans and issues that are uniquely their own.

For example, many nonprofit employers sponsor 401(k) plans, while others sponsor a 403(b) plan. The Internal Revenue Service (IRS) has made some changes in recent years to make 403(b) plans more like 401(k) plans, and the hot topics listed under our 401(k) Plans section apply to 403(b) plans as well.

Some 403(b) plans have features and problems that are not found in the 401(k) world.  FBT employee benefits lawyers deal with these questions often, such as:

  • Is the annuity contract or mutual fund custodial account arrangement in the name of the employer or individual employees? (Contracts in the name of employees restrict the employer's ability to make changes.)
  • Can a 403(b) plan be terminated? (What can be done if the annuity or mutual fund company will not distribute a participant's account without the participant's express election?)
  • What sort of plan document is required? (The IRS is in the process of overhauling its entire 403(b) plan document program and many questions remain unanswered.)
  • When is a 403(b) plan subject to the Employee Retirement Income Security Act (ERISA)? (If so, ERISA filing and disclosure requirements apply.)

Some nonprofit (and governmental) employers may also sponsor a 457(b) plan for select executives. 457(b) plans are not much like a 403(b) or 401(k) plan in terms of the requirements they must meet. 457(b) plans must follow their special rules exactly, or the participants' entire accounts will be immediately taxable. We help employers understand their obligations under 457(b) plans and provide guidance if something goes wrong.

Health and welfare programs sponsored by nonprofit employers are basically subject to the same rules as for-profit employer plans. There are some special rules for church plans, and church plan status is currently in the slow process of being clarified by the government and the courts. Your FBT employee benefits lawyers can provide experience and counsel for these issues.

Our team offers services related to the following employee health and welfare programs: