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Two 403(b) Plans


Guest Tad77

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Guest Tad77

We have assisted a administration client with an ERISA 403(b) plan under which an annual profit sharing plan has been made for many years. We were just informed that the client has also permitted elective 403(b) deferrals under a separate arrangement unknown to us. It appears that the intention was for the elective deferral plan to be a non-ERISA plan through which the only employer activity was the withholding and forwarding of the elective deferrals.

Are there any problems, past or present, with maintaining the separate plans (it appears that all employees were eligible to defer although employee eduction was not robust)? I assume a solution may be to add an elective deferral option to the ERISA 403(b) plan and have one plan with both elective deferrals and the profit sharing contribution. Does anyone see any pitfalls with that approach if the current 403(b) elective accounts are basically frozen?

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