I'd appreciate anyone's take on what the distinction is under the proposed "deemed IRA" regs regarding two points (1) your "deemed IRA" trust must be a a separate trust from the 401(a) plan's trust, yet, (2) it's OK to commingle the assets of the IRA trust and the 401(a) plan trust assets (proposed regs explicitly states this is ok).

Logistically and legally, just how does one keep these trusts separate (Deemed IRA vs. Qualified Plan) yet commingle these trusts investments (if so desired) ? I'm struggling just what the distinction is and how to walk that fine line. Anyone ?

My thoughts…


The separate trust refers to maintaining a separate trust documents to govern the assets and being able to account separately for the assets for each trust. Having these separate trusts does not prohibit the commingling of the Deemed IRA and the plan assets for investment purposes, as long as the separate accounting requirements are met.


It seems commingling the assets would be an accounting headache, especially for small prototype plans for which the document provider handles the tax reporting.

Can anyone describe the point in doing it at all? It sounds like a potential administrative nightmare.

It could be administratively cumbersome if any commingling occurs. At this juncture, involved parties may be better served to avoid commingling at all costs (IMHO).

As far as ‘ the point’, I think it is the moral suasion of employers to encourage their employees to save, by making it easier to do so thought automatic payroll deduction , thereby reducing any financial burden these individuals may place on the government during their retirement years…

Thanks Appleby. That helps, it's a document issue (separate trust docs) with a commingled but separately accounted for investment options (if so chosen).