Is this "coloring outside the lines" too much?

A lot of 403(b) plans are governmental. Previously, they could have a discretionary match with almost no restrictions on who, when, how much, etc., since there isn't any nondiscrimination testing.

Now that it is more restrictive, for a governmental plan, is there anything wrong with using the nonelective contribution, with everyone in their own group, and "coincidentally" the only people who get a nonelective are those who deferred? Smells funny, but would be easy to do...

Is there nondiscrimination testing on the non-elective?

Nope. It is a governmental plan. (Public school)

Just a hunch, @BG5150 might be suggesting, "are there any state laws that describe some type of non-discrimination testing?"

Under a State’s law, there might be constraints on a public-school employer’s authority:

A public-school district or other political subdivision of a State has no more power than State law grants it. Many States’ enabling statutes allow a public-school employer to collect and pay over salary-reduction contributions to a § 403(b) contract, but don’t allow other contributions.

State law might preclude a public-school employer from retirement provisions beyond participating in the Statewide retirement systems.

To the extent (if any) that State law requires or permits collective discussion with an employees’ association or other collective-bargaining group, that process might restrain a governmental employer.

However, sometimes a superintendent’s, principal’s, or other executive’s employment agreement is custom-negotiated. Agreements of that kind often require vetting by the school attorney and approval by the school board.

On 5/16/2025 at 12:42 PM, Belgarath said:

Now that it is more restrictive

What are you referring to here?  Just want to make sure I didn't miss anything