Guest WonderWhy Posted February 12, 2009 Posted February 12, 2009 I Wonder Why it is allowable for a non-profit organization to set up a 403B to specifically circumvent the anti-discrimination rules of a 401K. For profit companies don't have this option.
jpod Posted February 12, 2009 Posted February 12, 2009 The reason may be stated in the legislative history to the Tax Reform Act of 1986, but I don't remember. Probably 2 reasons: 1. 403bs with salary reduction go back to the 1950s, if not earlier, long before 401(k)s; and 2. There are no owners in 403(b) plans.
jpod Posted February 12, 2009 Posted February 12, 2009 Also: 3. the administrative difficulty of forcing corrective distributions out of individual annuities and custodial accounts in a 403(b) if an ADP-type test is failed.
david rigby Posted February 12, 2009 Posted February 12, 2009 Why are there inconsistencies in federal statutes? Perhaps, successful lobbying. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.
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