Contribution Allocation

[Stash026]

I haven't worked on a 403(b) in awhile, but my colleague is out-of-the-office and I'm getting questions from a potential client.

How can non-elective employer contributions be allocated to participants?  Can cross-testing be used, like in a standard 401(k) Plan?  What other formulas are allowed?

Thanks in advance!

[Belgarath]

Pretty much the same as a 401(k). BUT, just check your document - this will tell you what options are available. Most docs would allow general testing, integrated, pro-rata, whatever - the usual suspects. If it governmental as opposed to an ERISA 403(b), the world is your oyster, subject to 415, etc., and your document restrictions.

No top heavy or ADP in a 403(b) anyway.

[Stash026]

4 minutes ago, Belgarath said:

Pretty much the same as a 401(k). BUT, just check your document - this will tell you what options are available. Most docs would allow general testing, integrated, pro-rata, whatever - the usual suspects. If it governmental as opposed to an ERISA 403(b), the world is your oyster, subject to 415, etc., and your document restrictions.

No top heavy or ADP in a 403(b) anyway.

Thanks!  The document allows for "Equivalent Accrual Rates".  Would that basically be New Comp?

[Belgarath]

I assume so, but can't say with certainty without seeing the document. Does it allow for each participant to be considered a separate classification?

Also, the AA at that provision would typically refer you to the base document section(s) that would give you additional information. (X.07(b)(2)) or whatever...

[BG5150]

49 minutes ago, Stash026 said:

The document allows for "Equivalent Accrual Rates".  Would that basically be New Comp?

Did you ask the document provider?

[Stash026]

On 5/21/2021 at 9:42 AM, BG5150 said:

Did you ask the document provider?

I did.  I'm waiting for a response from them still though

[Patricia Neal Jensen]

Belgrath is correct!