Prrefunding rules

[Guest Pension Girl]

The final 401m regs prohibit prefunding, but mainly to prevent the acceleration of a tax deduction. A tax exempt entity does not get tax deductions. Therefore, if a 403b allocates the match each payroll period, but has a 1000 hour and last day requirement, does this not still violate the prefunding rules? At least in terms of contributions being made before the service is performed.

Any comments?

[GMK]

Don't know about 403(b)'s, but here's a similar prior discussion relating to 401(k)'s:

http://benefitslink.com/boards/index.php?showtopic=44702

Note the potential administrative trubles (posts #5 and #6).

It sounds like your per-payroll match contributions are being made after the service is performed, assuming the payroll is paid after the service is performed. The issue is more that the recipient is not yet eligible (last day requirement). or did I miss something.

[Guest Pension Girl]

It is sort of circular - technically the service has not been performed since the required service is 1000 hours AND employment on last day.

Thanks for the link I think that about says it all!