Floor offset with a 403(b) plan

[Guest Rae]

We have a nonprofit client who currently has a 403(b) plan with a discretionary employer nonelective contribution. Their advisor has inquired about a floor-offset arrangement with a DB plan, using the employer's nonelective contribution to the 403(b) as the account that will offset the DB benefit. Is this permissible?

I am leaning toward "no" but wondered if anyone else has had this question before. In any case, they will be made very aware of the increased fees and testing issues involved.

[AndyH]

Off the top of my head, I believe that the rule is that a 403(b) plan cannot be used to help a 401(a) plan pass coverage or nondiscrimination (or it could be the reverse, but there is a prohibition against such aggregation).

So I'm pretty certain that would be a no.

I would do some research to confirm but I think that is accurate.

I don't know if the proposed 403(b) regs address this or not but that is a place to look.