Does this smell right?

[kwalified]

a NP sponsors a 403(b) with an employee who makes in excess of the 401(a)17 limit. Sponsor makes a 12% contribution to the participant. In addition makes a 12% contribution of the excess to the plan and reports the excess contribution as comp, I believe, on the participants W-2. Does this sound kosher? Participant does not defer into the plan.

[QDROphile]

Is the excess based on the taxable compensation treated as a separate contract?

[mbozek]

a NP sponsors a 403(b) with an employee who makes in excess of the 401(a)17 limit. Sponsor makes a 12% contribution to the participant. In addition makes a 12% contribution of the excess to the plan and reports the excess contribution as comp, I believe, on the participants W-2. Does this sound kosher? Participant does not defer into the plan.

Are you saying that the employer makes two distinct contributions:

1. contributes 12% of comp as an employer contribution exempt from FICA tax.

2. pays the employee an additional 12% of comp which is included for FICA tax and is contributed as a salary reduction contribution to the 403b plan?

1 is permitted as long as it is a nondiscriminatory contribution and comp does not exceed the limit, e.g. 245k in 2011.

2 is permitted if the employer pays it to the employee as w-2 wages and does not exceed the max amount, e.g., $16,500/22,000 in 2011.