A not-for-profit company has their 403(b) plan with a large insurance company. One of the HCEs decided not to invest there, so he set up a 403(b) (including a plan document) with another investment firm and his assets are invested there. First, assuming the 2 documents have identical provisions, is that acceptable?

If that's not acceptable, I recall that plan participants have the ability to invest anywhere that will accept 403(b) assets. However, would there have to be an information sharing agreement between the 2 investment providers?

An employer can maintain as many 403b plans as it desires, however, contributions, loans, hardship withdrawals, MRDs etc. to all plans for the same participant must be aggregated to comply with the applicable limits.

Q- how could an employee establish a 403b plan by himself without getting the employer to adopt the plan as required by the 403b regs?

To be pre-tax or Roth, post-2008 contributions to a 403b contract requires that such contract be part of a plan. mjb has pointed out ERs set up plans, not EEs. See Treas Reg § 1.403(b)-3(b)(3). As part of an ER's 403b plan, it will likely require a 403b vendor to agree to perform certain functions. Treas Reg § 1.403(b)-3(b)(3)(ii). Such an agreement is not an info sharing agreement per se.

For an exchange after 9/24/2007 of a 403b contract with one vendor into a 403b contract with another vendor not to trigger taxation of the benefits, the receiving 403b vendor must have an info sharing agreement in place with the employer at the time of the exchange. Treas Reg § 1.403(b)-10(b)(2).

For the HCE that has attempted to do his own thing with a different vendor, depending on all the facts and circumstances there might be a remedy available until 6/30/2009. See Rev Proc 2007-71, Section 8.03.

I'm still gathering information (such as copies of the plan documents), but I think the HCE that set up the second plan is the person authorized to sign the plan document(s). The reason this came up is because the big insurance company said the HCE can't do that. I can see why they wouldn't want him to do that, but "can't?" The only thing I can think of is that maybe the company is limiting the employee investments to the big insurance company, in which case the HCE couldn't go elsewhere. But I thought employees could move their 403(b) accounts around, but now must have an information sharing agreement.

Is it possible that you are confusing the opening of a 403(b) account with another vendor, with the actual setting up of a plan ?

I've asked for the plan documents, but until I see them I can't be sure if there's simply an account, or if a second plan really exists. I was told that a plan document was completed with the second vendor.

The separate plan for the individual would satisfy the Universal Availability requirement, even if other employees are not eligible to participate, because the UA test excludes employees who are eligible under another 403(b) plan maintained by the employer. See 1.403(b)-5(b)(4)(ii)(A). As far as I can tell, as long as the plan doesn't involve matching or nonelective employer contributions, the employer could set up a limited 403(b) plan for rank/file (no hardship withdrawals, no loans, etc.) and a more flexible plan (hardship withdrawals, loans) for a limited group of employees. Of course, if ERISA applies then there may be limitations.