How mandatory do 403(b) plans have to be before they are no longer considered elective?
From the 403(b) documentation:
The following types of contributions can be made to 403(b) accounts.
Elective deferrals . These are contributions made under a salary
reduction agreement. This agreement allows your employer to withhold
money from your paycheck to be contributed directly into a 403(b)
account for your benefit. Except for Roth contributions, you do not
pay income tax on these contributions until you withdraw them from the
account. If your contributions are Roth contributions, you pay taxes
on your contributions but any qualified distributions from your Roth
account are tax free.
Nonelective contributions . These are employer contributions that are
not made under a salary reduction agreement. Nonelective contributions
include matching contributions, discretionary contributions, and
mandatory contributions made by your employer. You do not pay income
tax on these contributions until you withdraw them from the account.
If one has a retirement plan at work that requires contributions, is this sufficient to count as "nonelective contributions" - is there further clarity somewhere on what the definition of "mandatory contribution" is?
My assumption is an employer forcing employees to pick a retirement plan (one option being a 403b) and requiring a minimum contribution rate would be considered a "mandatory contribution" but I am not able to find much additional information on the IRS site anywhere. The TIAA document makes multiple references to mandatory 403b contributions.
A financial advisor today told me that this situation would still count against the elective deferral limit (k in 2016) but I was skeptical and after looking further into the laws am even more skeptical.
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So I learned that your employer CAN force you to make employee contributions. However, this source seems to think that the mandatory employee contributions do not count against the 402(g) limit of ,000.
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