Rolf Trautmann Posted December 7, 2011 Share Posted December 7, 2011 Plan Sponsor with both a 403(b) Plan with employer contributions and a Defined Benefit Plan. The DB Plan was frozen to new entrants a few years ago and new hires are given a 4% contribution in the 403(b) Plan instead. However, in testing the DB Plan for Coverage and Nondiscrimination, the 4% Employer Contribution can't be considered and both tests fail, absent correction. One solution would be to replace the 403(b) Plan with a 401(k) Plan, which would allow the employer contribution to be used and the PLan to satisfy both Coverage and Nondiscrimination. Another fix would be to remove all HCEs from the DB Plan, but this would accelerate the eventual failure of the Minimum Participation requirements of IRC Sec. 401(a)(26) from about 10 years down to 3 years, which is an undesirable result. What other solutions are Plan Sponsors using in this situation? Also, this has occurred for the 3 prior plan years (we were not involved with this until this year), so a retroactive fix for those year is needed. What have others done here? If you need more background information to reply, please post and we will happily provide it. Thanks in advance for any help or comments. Link to comment Share on other sites More sharing options...
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