(b)lines Ask the Experts – Revisiting “Why Offer a Combination of Plans?”

As readership of (b)lines has grown, no doubt that some readers may have missed some important Q&A from past issues. Thus, we will use some of the questions posed at the PLANADVISER conference session to provide readers with some of the more important Q&A exchanges from past issues, updating as necessary. We hope that you enjoy this “best of” Ask the Experts!  

An attendee asked: “I work with a plan sponsor who offers a 401(a) AND a 403(b) plan. I heard that there can be contribution limit advantages to such a design; is this true?  And, if not, what are my options to reduced the administrative burden of two separate plans going forward?”  

Michael A. Webb, Vice President, Retirement Services, Cammack LaRhette Consulting, answers:  

We last addressed this issue a in the June 21, 2011 issue of (b)lines (see (b)lines Ask the Experts – Why Offer a Combination of Plans?) and the information remains valid.   

At the PLANADVISER conference, we added that a 401(a)/403(b) plan design has become increasing rare due to the increased regulatory burden on 403(b) plans combined with the separate regulatory burden for 403(b) plans. The only area where it’s use is frequent is with plan sponsors that provide such a large 403(b) employer contribution (20% of pay or more) where executives would run into 415 dollar limit issues unless the 401(a)/403(b) plan design, with its separate 415 limits, was used.  

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.