Two differnt match formulas in same plan

[Nancy D]

Hi all,

I am new to the 403(b) world. I have a newly created Non Profit Agency that is the result of two different groups merging as of 7/1. Both groups have their own plans that will run thru the end of the year. Each plan counts service under both for eligiblity and vesting (matching contributions). Each plan has a differnt match formula. I have employees transferring from the entity with the more generous match to the entity with the less generous match. Is it possible to have two match formulas in the plan, one that mirrors more generous match for employees transferring from that agency and keep the existing match for employees who haven't moved. There are no HCEs among the transferring employees. Are there any implications I have to worry about?

Thanks for any help, I hope my question is clear.

[ETA Consulting LLC]

The short answer is that you can do whatever you want as long as you make contributions pursuant to a definitely determinable formula and that you continue to pass the appropriate non-discrimination tests by doing so.

As you dissect these two criteria to your situation, you'll may get a host of issue (or non at all).

With that said, when an individual moves from one division to another (typically making him ineligible for additional contributions to the former division and eligible for contributions to the new division) the individual merely begins to have his contributions calculated pursuant to the formula in the new plan.

It's a process.

Good Luck!

[Nancy D]

The short answer is that you can do whatever you want as long as you make contributions pursuant to a definitely determinable formula and that you continue to pass the appropriate non-discrimination tests by doing so.

As you dissect these two criteria to your situation, you'll may get a host of issue (or non at all).

With that said, when an individual moves from one division to another (typically making him ineligible for additional contributions to the former division and eligible for contributions to the new division) the individual merely begins to have his contributions calculated pursuant to the formula in the new plan.

It's a process.

Good Luck!

Thanks much for your response. This merger has been a learning experience!