403(b) taking excess deferrals to prevent ADP failure

[401_4_ever]

I am working with a 501©(3) that sponsors both a 401(k) and a non-ERISA 403(b). The 401(k) is having ADP testing issues. The plan's recordkeeper is proposing that in December of each year, a quick ADP test is performed, and any amounts that would cause the ADP test to fail is "transferred" to the 403(b) and treated as elective deferrals. This seems bizarre -- has anyone seen anything like this?

[ETA Consulting LLC]

If done, there should be language in the document to support the activity. In this case, you would be precluded from making the transfer without language in the written plan authorizing it.

Good Luck!

[QDROphile]

I don't think you can transfer between 403(b) and 401(k) plans. If you could, the you should also be able to merge.

[PensionPro]

Only eligible rollover distributions can be transferred between a 403(b) plan and a qualified plan.