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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 ($18k in 2016) but I was skeptical and after looking further into the laws am even more skeptical.

  • Can the downvoter explain what is wrong with this question? – enderland Oct 19 '16 at 12:09
  • I'm curious: What are your other choices besides a 403(b)? – Ben Miller Oct 20 '16 at 2:38
  • @BenMiller a defined benefit pension. – enderland Oct 20 '16 at 12:23
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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 $18,000.

  • Your employer can't force you to make deferral contributions citation needed? I'm about 100% sure they do, particularly since my spouse's benefits plan requires enrollment into a retirement plan. A few other sources reference this and in fact, the TIAA 403b overview uses the term 'mandatory'. The TIAA document suggests my understanding is correct, however it is not the IRS documentation I am hoping to see. – enderland Oct 19 '16 at 2:57
  • I believe that this is one of the subtle differences between the 401(k) and the 403(b). An employer can require mandatory salary deduction contributions into a 403(b). – Ben Miller Oct 19 '16 at 11:45
  • I was wrong. I did a little more digging and they can mandate employee contributions. I will edit my answer. – Chris Oct 19 '16 at 13:04

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