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I want to set up a 401a plan for matching contributions to a 457 plan,


Guest nicdaryl
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Guest nicdaryl

Can anyone explain 401(a) plans? I understand you can use this plan with a 457 plan for employer matches, however, when I called a couple mutual fund companies they have "never heard of such a plan". Are there any investments that can not be used in the 401a? I'm just feeling dumb calling all these places and no one has heard of this, where can I go? I am in Missouri.

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I may be able to help you find some resources, but first a question or two - why are you doing this? Are you wanting to get around the limits imposed on annual deferrals in a 457 plan? Do the majority of the employees participate in the current plan or just a select few? What kind of employer is it - tax-exempt or governmental?

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Guest nicdaryl

OK, First it's a tax exempt govt. hospital. They want to set up the 401a to match the employees 457 dollars. Here are 130 employees with 32 particapating. The plan does not exclude low paying employees.

Since I wrote I found that the mutual fund company that is doing the 457 will be the investment 401a plan only. They don't have a document in place for a Govt. Non profit 401a plan. So... my question now is can I get a phototype anywhere? Thank you for your reply.

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Guest nicdaryl

Sorry, I messed up the last message. What I was trying to say was. They will only be the investment vehical. They don't have a 401a document currently for govt. non-profits.

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This has been a continuing issue. Although governmental entities can have qualified plans (you can click here to see the requirements for one), governmental entities are exempt from many of the rules that apply to nongovernmental entities, and are covered by state laws from which nongovernmental entities are exempt. Thus, standard form documents do not cover them very well. Some governmental employers just use plans designed for private employers, but this may cause the governmental plans to be subject to rules that otherwise would not apply to them, to have plan documents that do not work very well (e.g., to require Department of Labor consent to certain kinds of transactions, when the Department of Labor will not get involved with transactions involving governmental plans), and to violate state laws that do apply to them. The only other alternative is an individually designed plan. However, this may not be feasible if few employees are covered.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

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I have to agree with Carol. As a governmental unit, adopting a general prototype agreement for a 401(a) plan may not be all that simple an option in the long run. I suggest that you start with one of your professional associations - for example, I believe that there is an association of city managers. Those associations may be aware of service providers for this specialized service to a small governmental unit.

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Guest tkellogg

Check with deferred comp providers that specialize in 457 plans (ICMA-RC, Nationwide Retirement Solutions and T Rowe Price are examples). I know both ICMA and Nationwide have 457 to 401(a) matching programs and plan documents already established. As others have indicated, this is not as simple to do as it seems, since the 401(a) has different plan provisions (such as potential vesting schedules) that must be considered.

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  • 3 weeks later...
Guest ronc

This type of arrangement is becoming more and more popular with governmental-type entities. We have had one for two years now. We match 457 deferrals and deposit them into our 401(a) plan.

I recommend you contact the National Assn of Government Defined Contribution Administrators, 859-231-1904, www.nagdca.org.

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