403(b) PLans
Does anyone have a working knowledge of 403(b) Plans?
I serve on the Board of a non profit Organization that has a 403(b) Plan in place. Four employees participate in the Plan; the Organization pays 4% matching contribution for the CEO only and makes no similar contribution to the other participating employees. I understand that an advantage of 403(b) Plans is there is no discrimination testing required on salary deferrals for the highly compensated but I have not found anything that allows or prohibits a discrimatory employer contribution. The investment advisor has not knowledge and simply offers ‘its been done this way for years’.
Permalink Submitted by Denise Appleby on Wed, 2012-07-25 19:23
[quote=”[email protected]“]Does anyone have a working knowledge of 403(b) Plans?
I serve on the Board of a non profit Organization that has a 403(b) Plan in place. Four employees participate in the Plan; the Organization pays 4% matching contribution for the CEO only and makes no similar contribution to the other participating employees. I understand that an advantage of 403(b) Plans is there is no discrimination testing required on salary deferrals for the highly compensated but I have not found anything that allows or prohibits a discrimatory employer contribution. The investment advisor has not knowledge and simply offers ‘its been done this way for years’.[/quote]
The nondiscrimination rules apply to the matching contribution (universal availability for salary deferral). Exceptions apply to governmental plans for testing under IRC § 401(m) for matching contributions. Cite §1.403(b)-5.