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Nonelective contributions--definition

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Also, contributions made pursuant to a participant's one-time election at the time of hire or first participation in any plan of the employer are treated as nonelective.

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Guest Harvey Carruth

As can be seen from the most recent posts to this thread, there is considerable room for confusion here. I prefer to use the two phrases "salary-reduction contributions" and "non-salary-reduction contributions" to distinguish between contributions that "reduce gross salary" and those that "do not reduce gross salary," respectively. With that convention, one has both "elective salary-reduction contributions" and "non-elective salary-reduction contributions," the latter of which are usually called "mandatory salary-reduction contributions." Both types of salary-reduction contributions are "employer contributions" from an Internal Revenue Code perspective, but only "elective salary-reduction contributions" are subject to the 402(g) elective deferral limit. Also, "mandatory salary-reduction contributions" reduce gross salary in determining includible compensation as defined in 403(B) and as defined in 415, even for tax years 1998 and beyond. Employer contributions other than "salary-reduction contributions" are generally referred to as "employer discretionary contributions" or "employer matching contributions."

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