Testing Question

[wmyer]

I have an ERISA 403(b) plan that provides for voluntary, basic and matching contributions. Although the plan does not have any exclused classes, some priests opt out of the plan and do not make or receive any contributions. Instead, their denomination or order provides for them. Has anyone else encountered anything like this? When performing 410(b) testing, 401(a)(4) testing and 401(m) testing, what do I do with these people? Some of the people who opt out are HCEs.

[Guest JurisPrude]

I think there is a "vow of poverty" provision,... they must have their salary go to their order. Then these people are not counted as employees and may be excluded from testing. Better Google this...

[Guest JurisPrude]

http://www.bakerdaniels.com/clientcenter/pub.cfm?pubid=2002

This post on a law firm on the proposed regs would remove the vow of poverty exception

[Guest JurisPrude]

http://a257.g.akamaitech.net/7/257/2422/06...df/04-25237.pdf

Here is the proposed reg from the Federal Register

[mbozek]

The IRS proposal to require 403(b) eligibilty for members of religious orders who have taken the vow of of poverty applies to the universal availability requirement for salary reduction. There is no requirement that a member of religious order make or accept salary reduction contributions which would conflict with their vows. Religious members who are HCEs can be excluded from employer contributions since there is no prohibiton of discrimination against an HCE.