Money purchase contribution dependent upon deferral to 403(b)

Money purchase plan provides a contribution of "X%" ONLY if you defer at least 3% in 403(b). I'm nearly certain I remember that in such a situation, the MP contribution is treated as a matching contribution subject to ACP testing. Agree/disagree? Thanks.

Bah. Don't bother - No HC anyway! Thanks.

but without knowing exactly the language in the document...

if it is truly a money purchase, it should be a non elective contribution, but then you are having it dependent on whether a deferral is made, and I didn't think you could do that, even if you don't have any HCEs.

If you are a NHCE you should be able to receive a nonelective even if you don't defer.

or at least I thought that was how it worked.

Who wrote this plan document?  What kind of employer is it?  Is there a law firm involved?  Are you administering this plan?  Did you look at it before you took it on?  Can you talk to the people who did write it? Biggest question: WHY WAS IT DONE THIS WAY AND BY WHOM?

PLEASE: our business is no complex that we really need much more data on most questions before we can give adequate responses.  It is a waste of everyone's time to try to reply to questions where much of the background info is missing.  Our business is one of nuances where small differences in the data make major differences in the answer.  All, just FWIW.

Larry - thanks for taking the time to respond. I will point out just one thing: you will notice that I edited the post as soon as reasonably possible to tell people not to bother, so I don't think it should have been an enormous time waste for anyone. 

Most of your questions I cannot answer, either for privacy reasons, or that those details are simply unknown. I've traced the document language back through the EGTRRA document, and it has been the same - why, I don't know. I didn't draft it, and have no idea how far back this language goes, or why it was done this way. Following is an applicable paragraph - there is also ACP language in the document in other spots. This particular document appears to be pre-approved Volume Submitter language, although it may well be modified language. No evidence (yet) of any IRS individual determination letter application or approval.

P.S. - just a quick edit - I do note that DOL Advisory Opinion 2012-02A addresses, in a completely different context, this precise arrangement. I know this has nothing to do with IRS qualification, but it does indicate that such plan provisions/combinations are not unknown. Doesn't mean they are correct...

Also, this is a non-governmental 501(c)(3) employer, subject to ERISA.

Nonelective Contribution. For each Plan Year, the Employer shall contribute 9% of the Compensation of each Participant who contributes at least 3% of his or her Compensation as an elective deferral to the “XXXXX Tax Sheltered Annuity Plan” for the Plan Year, and who is otherwise eligible to share in allocations in this Plan for the Plan Year. This Nonelective Contribution shall be considered a matching contribution for ACP testing purposes.

so as the note indicates, it is not really a nonelective contribution, but is considered a match

a strange animal indeed, why they simply didn't provide a match in the 403b one can only guess. maybe to make life difficult.

and as you noted with no HCEs it becomes a moot point as their is no testing (at least as long as no one becomes an HCE)

I guess for the 5500 you would use the code to indicate the plan has a match provision!?

I am guessing that they wanted to keep the 403(b) employee money only, and therefore not subject to ERISA.  (I am not necessarily vouching for the viability of that position.) 

2 hours ago, Tom Poje said:

maybe to make life difficult.

Ain't that the truth!!!

Beats me. Jpod, they have been filing 5500 forms every year on the 403(b) plan, so I'm guessing that wasn't necessarily the reason. But the reasons, whether valid or not, lie in the very distant past and will never be known. Players/decision makers either long gone or unknown.

Anyway, thanks to all for the discussion. This one is just too strange.