403(b), coverage question.

[Guest dietpepsi]

This seems to be an aggressive plan design but appears to be doable unless I am missing something. Please, let me know if I am missing something.

It is a 403(b) plan with an employer contribution (non-matching). The employer contribution only goes to certain HC employees. In order to pass coverage they are going to combine the the 403(b) employer contribution with a DB plan (that covers everyone) for the ratio percentage test and do a general test.

Site 1.410(b)-7(f).

Thanks

[Guest mikewebb68]

No, you are not missing something. In fact, this is a common plan design; although the twist here is that all employees benefit in the db (in most of the designs I see, the HCEs only benefit in the 403(b). This twist could possibly cause failure of the general test, espeically if there are some young HCEs in the group, since the test is sensitive to employee age.

The testing is complex, and the entity is likely to incur significant expense from the db plan actuary or other third party to test to plan.

I don't know if the upcoming 403(b) regulations would have a negative impact on the ability to design a 403(b) plan in such a matter, but I would suspect that the new regs would be silent on such an issue.