Combo Program Specialist
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We are looking into taking over the third party administration of a plan that currently has a QACA that utilizes the 3% non-elective contribution safe harbor method that vests after two years of vesting service. We are exploring changing the ADP safe harbor method to traditional 3% non-elective which is 100% vested immediately, but if the administrator is already successfully administering the QACA, I am thinking this may not be in their best interest? I think my question is, "is the ability to administer the QACA properly the only difference between a two year difference in vesting requirement, or are there other considerations?" A two year vesting schedule seems like a huge benefit for a small trade-off. The end goal of the program design is to add nonsafe harbor non-elective contributions to the plan and potentially also adopt a DB plan, I want to use the QACA safe harbor contributions towards top-heavy and 401(a) testing if i can, and if it makes sense to continue to maintain the QACA.
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I suppose my question is actually whether or not they can be excluded from the non-discrimination testing - are they considered employees of the hospital if they are eligible for the 403(b), and if so, does that indicate the Dr is not their employer?
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A doctor has a few people working in his office at a hospital who are paid by the hospital and have access to a 403(b) plan with the hospital, of which at least one employee contributes. The doctor operates under his own business entity and does not have any direct employees paid by that entity. The doctor also maintains a 401(k) Profit Sharing Plan and Defined Benefit Plan sponsored by his entity. Does the doctor need to make contributions to the people who work in his office, if he accrues benefits in and contributes to both plans? I believe they qualify as employees under the common law definition but I'm not clear on the effect of their eligibility for the 403(b). Also not sure if I am asking the right questions? Any opinions from this community are greatly appreciated.