Government plans

[Guest eamaly]

Can someone please help me understand what plan(s) are available to government entities. For some reason I was under the impression that municipalities could sponsor a 401(k). True? Not true? If not, what are the available choices for local government outside of a 457?

Thanks in advance

[Carol V. Calhoun]

A 401(k) plan is currently (with very limited exceptions) unavailable to employees of a state or local government unless the "employer" sponsored one before a transitional date set forth in the statute.

A local governmental entity can sponsor a 457(B) plan. If it is a public school or university, or a governmental instrumentality that has obtained status as a 501©(3) organization, it can sponsor a 403(B) plan. And in some instances, it can sponsor a simplified employee pension ("SEP").

There are other types of plans available (e.g., a defined benefit plan, a profit-sharing plan, or a money purchase pension plan. But the ones set forth above are the primary ones that allow employees to make elections as often as annually to make pretax contributions.