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Prevailing Wage in a 403b

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I don;t understand how a non-profit could be subject to prevailing wage laws,, but it has something to do with their clients working on federal projects under some "put people to work" program.

Anyone see any reason why this cannot be done in a 403b plan?

Austin Powers, CPA, QPA, ERPA

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I am not sure about Prevailing Wage in a non profit, but most of the non profit's have some form of state contract  that we provide administration services usually have some mandatory retirement plan contribution percentage as part of their state contract.

For example we provide services to three or four non profits that have state contracts to provide mental heath services.  Each of their state contracts require that they provide an X% of employer contribution on an annual basis.  We generally use a 401(k) Plan to accomplish the goal because the employer contribution would require that the 403(b) plan become ERISA qualified.  All of the non profits we provide services for don't have HCE issues.



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Hey Austin - don't know if this will help - I just skimmed a couple of questions, but I did note that a SCHOOL may have to pay Davis-Bacon wages in some circumstances. There is tons more information here, but I didn't take any time to look.

https://energy.gov/sites/prod/files/2014/10/f18/DBA FAQs for Posting.pdf

P.S. - here's one of the q & a's:

Q: Are non-profit corporations subject to DBA?

A: For purposes of DBA, non-profit corporations are treated the same as for-profit corporations. Therefore, when performing work on government-funded projects, the non-profit must pay its employees the DBA prevailing wages.

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To the extent the organization is subject to the requirement, there should be no objection to using a 403(b) to meet it. The requirement is just that you need to put a certain amount of money into benefits, and there is a lot of flexibility in what benefits to provide. 

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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