How Can Plan Sponsors Contribute to Multiple Plans for a Single Participant?

Q: We are a private higher education plan sponsor. Our recordkeeper recently told us that we could make substantial employer contributions to our executives and coaches for retirement through a combination of a 401(a), 403(b), 457(b) and 415(m) plan, since the contribution limits for each of those plans are separate from one another. Is our recordkeeper correct?

Kimberly Boberg, Kelly Geloneck, Emily Gerard and David Levine, with Groom Law Group, and Michael A. Webb, senior financial adviser at CAPTRUST, answer:

A: Your recordkeeper is partially correct. As we pointed out in a prior Ask the Experts column, for individuals earning amounts that would result in contributions exceeding the contribution limits of any one plan, contributions could be made to up to four separate plans—401(a), 403(b), 457(b) and 415(m)—as you describe, with each plan having its own separate contribution limits.

However, it is important to note that private employers are ineligible to sponsor a 415(m) plan; only public employers may do so. Additionally, as a private employer, your plans are subject to nondiscrimination testing, which may further limit contributions from highly paid employees to 403(b) and 401(a) plans. Even so, there are likely opportunities to provide substantial contributions for employees through a combination of a 401(a), 403(b) and 457(b) plans.

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.

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