403(b) and limits when you have mandatory and elective contributions

[Guest xab]

I am a little confused with the interplay of the 403(b), 402(g) and 415©(1)(A) limits.

I have a 403(b) plan whereby an employee must make a mandatory contribution of 4% of pay. The employer than makes a mandatory contribution of 20% of pay. (Obviously, pay is limited to the 401(a)(17) definition). The 4% of pay contribution is made by salary deferral (i.e., on a pro-rata basis from pay over the year).

The employee then wants to defer as much money as possible into a voluntary 403(b).

I always thought that the mandatory contribution - 4% - did not count against the 402(g) limit because it was not an "elective" deferral. Therefore, it seemed to me that the employee had the full 402(g) limit (including catch-ups) to defer into the voluntary 403(b) - SUBJECT to the 415©(1)(A) limit (which would also include the sum of the mandatory employee and employer contributions to the other 403(b) plan - but would not include any catch-ups).

Am I just wrong? Is the 4% of pay actually counted against the 402(g) limit because it is made on a salary deferral basis, even if it is mandatory?

Thanks so much for any thoughts.