This allows employees to elect to make salary-reduction contributions. The 2007 limit on elective deferrals is 100 percent of salary up to $15,500 if the employee is under 50 years of age; $20,500 if over 50.
Employees can't make salary-reduction contributions
Thus, to the extent that retiree benefits are funded, contributions must be employer contributions, not salary-reduction contributions
2002-41, an employer sponsored an HRA paid for solely by the employer, not through salary-reduction contributions
. In Situation 2, the maximum reimbursement under the HRA not applied to reimburse medical care expenses before an employee retires or otherwise terminates employment continues to be available after retirement or termination for any Sec.
401(k) plan) can continue to make salary-reduction contributions
, regardless of age.
403(b) plan: If an employer is unable to fund a retirement benefit for its employees, it could provide a plan that accepts pretax, employee salary-reduction contributions
. Such arrangements have many advantages:
In the ruling, an employer designed its health plans so that an employee paid all or a portion of the health insurance premium through pre-tax salary-reduction contributions
. That would reduce the employee's FICA and FUTA wage base on which Federal payroll taxes are assessed.
403(b) (12) (i) applies to nonelective contributions (i.e., contributions other than salary-reduction contributions