Anone have any experiece? Apparently (I am told) that ify ou offer a 403b to your employees who are teachers in public schools in Texas, you MUST offer the funds of ALL approved vendors to your employees, or at least allow them to choose from all of the approved vendors.

DOes anyone know if that is accurate? It just seems so hard to believe that you have not choice but to work with 10 vendors, or something ridiculous like that...

Yes, that is correct, PLUS YOU have to be approved to practice in Texas.

I cannot figure how they get around ERISA pre-emption even if they escape ERISA coverage.

One "gets around" ERISA preemption because there is no ERISA coverage.

Whether they are allowed to do this or not is a question for the supreme court, because they DID do this.

So let's say a school wanted to add a 401k plan, could they? The school in question is a charter school and is a 501c3.

I dont know if you can establish a 401k plan to avoid the problem. There are a lot of pecular rules for public 403 plans in TX. You need to go to the Texas association of School Boards web site and look at the rules for 403b plans. The web site recommends retaining both an attorney and investment advisor who are familar with the law for texas 403b plans.

Your client will have to spend some $ to figure out how to comply with TX law. TX can set its own rules for public 403b plans because they are exempt from ERISA.

TX is not the only state that requires public schools to take all 403b vendors. CA, WA and OH have similar laws.