Guest DebN Posted February 23, 2001 Posted February 23, 2001 Very new to 403(B) world! Can you have definition of compensation in doc to exclude salary deferrals? What would be advantage to this if there is no p/s and match is capped at 4% of comp? Also, I assume adp/acp testing is basically like 401(k)testing? Thanks!
Guest gaaberggillespie Posted February 26, 2001 Posted February 26, 2001 You can use a compensation definitin that is exclusive of deferrals, but after many years, the IRS finally changed the definition of compensation so that all the caluclations, including 415 and minimum exclusion calculations, could be based on gross pay inclusive of deferrals. Generally, this is the definition that is used, that is 415 compensation. It is far simpler to use the same definition of compensation as there is far less liklihood for error. You also need to consider any 125 deferrals. I generally recommend using gross pay inclusive of all deferrals.
Guest DebN Posted February 27, 2001 Posted February 27, 2001 Thanks! I've done some more research over the weekend and realize there is no ADP testing too.
Ellie Lowder Posted February 27, 2001 Posted February 27, 2001 Debbie, ADP testing does not apply to 403(B) deferrals.
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