403(b) eligibility for employer contributions?

[Guest]

A private school wants to set up a 403b) plan. As required, eligibility to defer will be immediate. Can there be a one year eligibility period for the profit sharing contribution and two years for the matching contributions?

[Carol V. Calhoun]

A one-year period for the profit sharing contributions should not be an issue. A two-year hold-out for matching contributions would be an issue under Code section 410(a)(1)(A)(ii) unless the employer contributions were immediately 100% vested.

[jlf]

I am under the impression that for profits are precluded from sponsoring a 403b arrangement. Please clarify.

[Carol V. Calhoun]

jlf, you are correct. I was making the assumption that the school, although private, was tax-exempt under 501©(3), rather than being a for-profit entity.