Election not to participate

[Guest medinael]

Can an otherwise eligible employee elect not to participate in a 403(b) plan - i.e., not receive the employer contribution? I know there is a prohibition against irrevocable elections not to participate in standardized prototype 401(k) plans, but what is the rule with respect to 403(b)s?

[mbozek]

Aside from the question of why an employee would turn down a contribution to a retirement plan, there is no prohibition on an employee waiving out of a plan, provided the plan permits an employee to waive. The only question is whether the plan would meet the 410(b) participation standards after the waiver (if this is a NP employer. A public er is not subject to 410(b)). Is the employee a member of a religious order who has taken a vow of poverty? The plan would have to permit the ee to make salary reduction.

[Guest medinael]

Thanks. Yes the employee is a priest who is the executive director of the nonprofit organization sponsoring the plan. Since his religious order will fund his retirement, he'd like to save the np some money and opt out of the employer contribution.