Ok, here's my question. Suppose you have a Doctor in private practice. He owns the practice, sponsors a PS plan, and receives a maximum contribution for 2007 of $45,000. He also works, as an employee, for a local hospital. And he makes elective deferrals to a 403(b), AS WELL AS receiving employer contributions to the 403(b). Clearly, the elective deferrals must be aggregated with his PS plan. What about the hospital employer contributions? While it seems an unjust result, it seems like the regulation could be read to require aggregation of any 403(b) amount, and not just the deferrals. What do y'all think?

(2) Special rules under which the employer is deemed to maintain the annuity contract -(i) In general. Where a participant on whose behalf a section 403(b) annuity contract is purchased is in control of any employer for a limitation year as defined in paragraph (f)(2)(ii) of this section (regardless of whether the employer controlled by the participant is the employer maintaining the section 403(b) annuity contract), the annuity contract for the benefit of the participant is treated as a defined contribution plan maintained by both the controlled employer and the participant for that limitation year. Accordingly, where a participant on whose behalf a section 403(b) annuity contract is purchased is in control of any employer for a limitation year, the section 403(b) annuity contract is aggregated with all other defined contribution plans maintained by that employer. In addition, in such a case, the section 403(b) annuity contract is aggregated with all other defined contribution plans maintained by the employee or any other employer that is controlled by the employee. Thus, for example, if a doctor is employed by a non-profit hospital to which section 501©(3) applies and which provides him with a section 403(b) annuity contract, and the doctor also maintains a private practice as a shareholder owning more than 50 percent of a professional corporation, then any qualified defined contribution plan of the professional corporation must be aggregated with the section 403(b) annuity contract for purposes of applying the limitations of section 415© and §1.415©-1. For purposes of this paragraph (f)(2), it is immaterial whether the section 403(b) annuity contract is purchased as a result of a salary reduction agreement between the employer and the participant.

It depends on his ownership percentage of his practice.

If he owns more than 50%, he is a majority owner, and the 415 limit is aggregated.

If he has a business partner, thus owning only 50% or less of his practice, then the 415 limits are separate.

The employee controls his own 403(b), so he's the 100% owner of that piece of the pie, making the control occur when more than 50% ownership exists in another practice.

In the situation I'm questioning, he is 100% owner, and I have no question about the deferral portion - it is aggregated.

One could argue, however, that he is NOT in charge of his 403(b) in terms of an employer's contribution. Say there were no deferrals at all - just employer (hospital) contributions to the 403(b). Does your answer remain the same?

If the hospital instead had a profit sharing plan, then there would be no aggregation of THOSE employer contributions, so as I said, it seems like an unjust result, but it seems to be where the reg is leading me.

It is in deed an unjust result. But it has been that way for ages.

Thanks to you both.

Its been that way since ERISA when IRC 415(k)(4) was added to the IRC. Why is it unjust? It actually benefits employees of a non profit or SD because the benefits accrued under the employer's retirement plan (remember under IRC 415 as originally enacted DB benefits had to be aggregated with DC plans) are not aggregated with the contributions to a 403b plan because the employee, not the employer is deemed to be in control of the 403b plan. Thus NP/SD employees have an employer contribution limit of 46,000 under a DC plan and an additional 15,500, 20,500 or even 46,000 under a 403b plan. They can also defer an additional 15,500 or 20,500 under a 457b plan. I dont know any plans for profit making employees that offer a maximum contribution of $117,500 (46, 51 and 20.5) or employee deferrals of as much as 41k while working for a single employer.