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ACP Testing: 403b vs. 401k


Craig Garner

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Based on info from this forum, 403b Answer Book, various articles, websites and vendors....it seems to me that a non-electing church plan may be treated differently for testing purposes depending on the type of plan it sponsors. To be specific, I am referring to a "steeple" church as defined in 3121(w), including qualified church-controlled organizations (not to church affiliated organizations).

Here's what my research seems to indicate:

A non-electing church plan that is a 403b with a match does NOT need to do ACP testing.

A non-electing church plan that is a 401k with a match DOES need to do ACP testing (and ADP, too)

So, it looks like the "type" of plan a church sponsors is important to the testing required. Is this correct?

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This happens to be a (b)(1) & (b)(7) plan. I understand there are some differences between (b)(9) retirement accounts and plans with (b)(1) & (b)(7) annuity/custodial accounts (not only with the type of available investments, but also with regard to the written plan document requirement, for example).

ACP testing (IRC 401(m)) refers to the discrimination test on Matching Contributions. (For example, 414(e) religious organizations would be required to do ACP testing).

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