401(k) and 403(b) combination plans

[jaemmons]

If a tax-exempt organization sponsors a 403(b) for salary deferral purposes, but makes matching contributions to a 401(k) plan, is the 401(k) plan subject to ACP testing? I believe it is, but just need some clarification. Thanks

[MWeddell]

Yes.

Note that there's an argument that the 403(b) must be subject to ERISA when you're computing a match based on the deferrals even if the match is made in a qualified plan instead of in the 403(b) arrangement.

[Guest Peter Buck]

In another thread I asked if a non profit could sponsor a 403(b) and 401(k) with match only for 401(k) salary deferrals and have the 403(b) plan be a non ERISA plan that would allow HCE's to defer above any limit imposed by the ADP test in the 401(k). Strangely, no one responded so I thought I'd try here

[MWeddell]

Peter, what you've suggested is possible. Whether the 403(b) plan is non-ERISA depends on more than whether it accepts employer contributions of course.