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match 529 contribution into 403(b)?

Guest mike webb

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Guest mike webb

I know that a matching contribution need not necessarily be a component of the same plan of the elective deferral (or, rarely after-tax) contribution. For example, I have commonly seen plan designs where an elective deferral has been deposited into a 403(B) plan, while the matching contribution was made to a 401(a)plan.

Following this logic, can "matches" into a 403(B) plan be made contingent on contributions to non-retirement plans? For example, Employer X wants to provide participants with a choice of making an elective deferral into a 403(B) plan that will be matched in the 403(B), or making contributions to a 529 educational savings account that would also be "matched" in the 403(B). Is this permissible? I suspect not, but I can't find a cite that would prohibit such a "match"?

If such an arrangement is permissible, would the 403(B) "match" be considered a matching contribution for testing purposes? I suspect not, since Reg. 1.401(m)(B)(4)(ii)(A) defines matching contributions that are made "on behalf of an employee on account of the employee's elective contributions or employee contributions for the plan year."

Any insight that anyone can provide will be greatly appreciated, as always!


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