Questions on 403(b) Elective Deferral Limit

[Guest Minette Ketchings]

I'm new to the retirement plan administration world and I have questions about determining my employees maximum contribution to our 403(B) plan.

1. We have a 403 (B) plan that our employees contribute to through salary reduction agreements. This plan is with TIAA-CREF. We also have a 401 (a) profit sharing plan that the company contributes 12% to each year. This plan is with AmSouth Bank. The employees do not contribute to the 401 (a) plan and the company does not contribute to the 403 (B) plan. Do I have to take the company 401 (a) contributions into account when figuring the employee's max contribution to the 403 (B)?

2. In 1997 we formed a new company. All the employees were terminated from the old company and hired by the new company. The two companies have common board members, but one is not a subsidiary of the other. The old company does not have any employees. For purposes of determining max contributions for 2001, do I use the employees' actual hire date or the date they became employees of the new company? As for prior contributions, do I go all the way back and take into consideration contributions made under old company or just contributions made under new company?

3. I would like a plain English defination of 402(g) limit, 403(b)exclusion allowance, 415©(1) limit.

Any help is greatly appreciated. Thank you.

[QDROphile]

1. Yes, for the exclusion allowance. Probably not for the annual addition limit.

2. The analysis depends on all the facts and circumstances. The IRS has ruled on similar circumstances. You need help on this one.

[Guest Jeff V]

402(g) is the $10,500 limit on pre-tax employee deferrals to the plan.

415 is the annual additions limitation. This test must be run prior to 401(m) test. For each participant, add up all the money that went to (* or "will be" deposited to - see below) each participant's account for the year (includes employee pre- and after-tax, employer matching and forfeiture reallocations, if any.)

The total amount cannot exceed the lesser of a) $30,000 or 25% of total compensation (total comp. includes adding back and pre-tax deferrals under section 401(k), 125, 403(B) and/or 457 plans.

* The tricky part here is that you have to run the 415 test as if the employer match was already allocated, but the 415 test must be satisfied for each participant prior to actually running the 401(m) test (HCE test on after-tax deferrals and matching contributions.)