Q. Suppose an employer offers a 403(b) Non-ERISA plan to her employees, and it's not clear to her which duties she has as an employer that offers this plan. She is aware that the plan sponsor needs to supervise for compliance violations such as borrowing more than $50,000 and taking distributions while still employed and under age 59½.
What's less clear to her is whether, since this is a Non-ERISA situation, the employer has the legal and fiduciary responsibility to address investment fees, investment performance, etc. — as would be the case if it were an ERISA plan.
A. Since ERISA does not apply, the only other source of any potential fiduciary responsibilities would be state statutes. The statutes do vary from state to state, and in many, there is no fiduciary responsibility assigned to the 403(b) plans of public education employers. In some states, there may be fiduciary responsibility assigned. Thus, the employer would need to be aware of the statues in the specific state of domicile.
Note that if the employer is a 501(c)(3) employer, instead of a public education employer, it would need to maintain a "hands off" posture in order to keep the 403(b) plan a non-ERISA plan.