Government Defined Contribution Plan, 457 and 403(b)

[Guest KDGCRK]

If a government employer maintains a qualified defined contribution plan, a 457 plan and a 403(B) plan is there a connection among the three as to the amount that can be contributed to each plan? In particular, we are concerned about whether contributions to the qualified DC plan will cause the amount which can be contributed on a tax favorable basis to the 457 or 403(B) to be decreased, or vice versa. Are the respective contribution limits interrelated or are they all independent of each other?

[Carol V. Calhoun]

Elective contributions to 401(k) and 403(B) plans are aggregated in applying the limits on elective deferrals of section 402(g). However, unless the 401(a) plan is a grandfathered 401(k) plan, this would not be a concern.

Elective contributions to a 457(B) plan are no longer aggregated with elective contributions to a 401(a) or 403(B) plan for purposes of the 402(g) limit. (A glitch in EGTRRA which caused the compensation base for 457(B) plan purposes to be reduced by elective contributions has now been rectified by the Job Creation and Worker Assistance Act of 2002.)

For section 415 purposes, contributions to a 401(a) plan, a 403(B) plan, and a 457(B) plan of the same governmental employer are never aggregated (although if a governmental employee has a separate business which has a 401(a) plan, 403(B) contributions on behalf of that employee must be aggregated with contributions to the business's 401(a) plan for 415© purposes.