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401(a) profit sharing and 403(b) annuity

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A 501(c)(3) Employer maintains a 403(b) annuity with employee contributions only as well as a profit sharing plan with a fixed formula of 3% of compensation.

Apparently the two plans were never coordinated and one has recently learned of the other.

As far as 5500s, since the 403(b) contains only employee contributions, no 5500s have been filed; 5500s have been filed for the profit sharing plan each year of its existence.

We do not handle any 501(c)(3) organization plans, but something seems a bit "off" here, and think it should be corrected, but how???

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This is actually a pretty typical set up for a not for profit. They usually will refer to the profit sharing plan as the 401(a) plan.

I'm curious about the "one has recently learned of the other" and what you mean by that. Are you just talking about the TPA firms doing the work?

William C. Presson, ERPA, QPA, QKA
C 205.994.4070


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As Bill says, "pretty normal."   These comments do assume, however, that the 403(b) was actually Non-ERISA.  Simply not having employer contributions is not enough.  It is an issue of employer control over the plan.  I suggest either making it clear that you are not responsible for the status of the 403(b) or digging into it so that you are satisfied it is and has been actually Non-ERISA.  The place to begin is what does the plan document say?

Good that the two plans were "never coordinated."  Coordination might have made the 403(b) ERISA.


Patricia Neal Jensen, JD

Vice President and Nonprofit Practice Leader

|Future Plan, an Ascensus Company

21031 Ventura Blvd., 12th Floor

Woodland Hills, CA 91364

E patricia.jensen@futureplan.com

P 949-325-6727

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  • 2 weeks later...

No - a non-profit organization isn't limited by 404, which deals with deductions. Since the non-profit doesn't have deductions, they aren't limited to the 25% of payroll - they are just limited by 415 limits. So, theoretically, if everyone gets paid less than 56,000, the employer could contribute 100%. (Not saying I've ever seen this)!!! But I have seen a contribution in excess of 25% in one plan.

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