403(b) match

[Lori H]

a high school has a 403(b), in order to receive the match the SPD states"you will have met the service requirement when you have completed 24 months of service" and that was what was elected in the AA. the SPD further states that "you will have completed the required number of months if you are employed by us at any time after you have completed that number of months measured from your initial employement commencement date" which I am interpreting that if you quit after 12 months and come back, you can be eligible for the match after an additional 12 months of service.

This means that any employee, regardless of hours worked, can be eligible for the plan match, after 24 months of service, correct? Full time and part time. However, the plan excludes employees who normally work less than 20 hours per week and are aliens, so basically they would have to work just over 1000 hours a year to be eligible for the match.

[ETA Consulting LLC]

A high school? Public education institution, yes, are they are governmental employer. If so, then moot point, because the ERISA 1000 hour rule does not apply.

For a non-governmental sponsoring a 403(b), you've just identified an interesting anomaly with respect to match eligibility; where it is actually possible (in theory) to meet the conditions of receiving a matching contribution without actually meeting the conditions for deferring. You can actually get up to 1000 hours per year without "normally working 20 hours per week"; but the maximum year of service for match eligibility is 1000 hours per year. Adding fuel to the fire is that the definition of match is basically a contribution that is contingent upon a deferral (or employee contribuiton). In other words, you cannot make anything other than a matching contribution contingent on an employee making a deferral. So, any of the 'so called' nonelective contributions given to only those employees who defer are basically matching contribution (tested under ACP) whether you like it or not (except for governmental employers and churches).

So, who would you include in the ACP test when the employee meets the age and service requirements for matching contributions but fail to meet the service requirements for making deferral?

I'd say shoot the consultant who designed this fiasco. It's the same has providing a payroll matching contribution with a last day requirement. It's legal, but administratively and (legally) inconsistent. One art of plan design is consulting to avoid those inconsistencies. But, once you're staring the issue in the face, you're left with only judgement call taking a 'reasonable' approach (which there's always going to be someone to disagree with). I wouldn't include them in the test if they were actually ineligible to defer (but do not think it violates ERISA on the surface, because it's still match).

I do understand your fact pattern doesn't prescribe a 1000 hour year but a 24 month elapsed time, but the arguments are still the same.

I appreciate your situation