Which 403(b) plan provisions are usually subject to annual compliance testing?
The most commonly used 403(b) plan provisions that can trigger an annual testing requirement are the following: • Employer matching contributions – Any employer contribution that is contingent on the employee making a salary deferral contribution is treated as a matching contribution for compliance testing purposes • Different levels of employer contributions for different groups or categories of eligible employees – Example: Tiered/non-uniform contribution rates (match or non-match) based on years of service, position with the organization, salaried versus hourly employees, etc. • Different types of employer contributions for different groups or categories of employees – Example: Matching contributions for employees with less than five years of service with the organization and non-matching contributions for employees with five or more years of service • Exclusion of certain types of employees from the employer-funded contribution, other than the excludible categories allowed by law –
