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Employer Contribution - Discrimination?


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Employer contributes an amount equal to 18% of employee's salary toward the organization's (fully-insured) health plan premiums. If the 18% is more than enough to cover the premiums, then the excess is contributed to the employee's 403(b) plan account. If the 18% is not enough to cover the health plan premiums, the employee must pay for the difference.

Is this arrangement legal? Since the 18% is based upon individual employee salary, higher paid employees are going to get a higher contribution. Presumably, since it is a fully-insured health plan, the health plan contribution piece is fine. But does the arrangement violate 403(b)(12) on the retirement plan side?

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