Do the qualified plan eligibility rules apply to 403(B) plans for employer contributions? For instance, may a sponsor of a 403(B) plan who makes a 4% contribution require 3 months of service and more than 20 hours per week. Obviously, this is not permitted for qualified plans. Also, may the employer impose a last day requirement to receive the employer contribution? Thanks.

It's my understanding (and I am not a 403(B) pro) that voluntary 403(B)s cannot place the service requirements you mention, but that a 403(B) that pairs salary reduction contributions with employer contributions, can impose service requirements (and also requires a plan document and ERISA/REA compliance). You say that qualified plans cannot place service requirements?

My question related to the specific eligibility of 3 months and 20 hours a week. A qualified plan cannot combine months and hours of service. For instance, a qualified plan that requires 3 months eligibility cannot also have an hours of service requirement. Can 403(B)'s do what my example has done?

The nondiscrimination rules of 403(B) plans, except as regards salary reduction contributions, are identical to those for qualified plans. See Code section 403(B)(12)(A)(i), which specifically cross-references the Code sections covering nondiscrimination by qualified plans.

Of course, if you have a state or local governmental plan, it may be exempt from at least most of the nondiscrimination rules, regardless of whether it is a 401(a) or 403(B) plan.

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