How will Marla's proposed contribution to the Section 403(b) plan affect the employer contribution to the money purchase plan?

How will Marla's proposed contribution to the Section 403(b) plan affect the employer contribution to the money purchase plan?

• A. Marla cannot participate in the Section 403(b) plan because of employer contributions
• B. The employer contributions to the money purchase plan are included in the annual additions limit
• C. The employer cannot contribute to the money purchase plan for Marla if she participates in the Section 403(b) plan
• D. The employer contribution to the money purchase plan is unaffected by Marla's elective deferral

Answer: (D)

The proposed contribution that Marla makes to the Section 403(b) plan does not directly impact the employer's contribution to the money purchase plan. This is because the two plans operate under different sets of rules regarding contributions. A Section 403(b) plan is a type of tax-deferred retirement plan for employees of certain public schools and tax-exempt organizations, allowing employees to make elective salary deferrals. Meanwhile, a money purchase plan is a type of defined contribution plan where the employer commits to contributing a specific amount, regardless of the employee's contributions. Since the employer's contributions to a money purchase plan are generally determined by the terms of the plan itself and are not contingent upon the employee's participation in a 403(b) plan, Marla’s decision to make contributions to her 403(b) does not alter the employer's ability or obligation to contribute to the money purchase plan on her behalf. Thus, Marla's elective deferrals in the 403(b) plan are independent of and do not affect the money purchase plan contributions from her employer.

The proposed contribution that Marla makes to the Section 403(b) plan does not directly impact the employer's contribution to the money purchase plan. This is because the two plans operate under different sets of rules regarding contributions.

A Section 403(b) plan is a type of tax-deferred retirement plan for employees of certain public schools and tax-exempt organizations, allowing employees to make elective salary deferrals. Meanwhile, a money purchase plan is a type of defined contribution plan where the employer commits to contributing a specific amount, regardless of the employee's contributions.

Since the employer's contributions to a money purchase plan are generally determined by the terms of the plan itself and are not contingent upon the employee's participation in a 403(b) plan, Marla’s decision to make contributions to her 403(b) does not alter the employer's ability or obligation to contribute to the money purchase plan on her behalf. Thus, Marla's elective deferrals in the 403(b) plan are independent of and do not affect the money purchase plan contributions from her employer.