401(k) plan and MPP

[eilano]

We have a new 401k plan that was set up by a broker and determined that the client also had a MPP that had never filed a form 5500. During several discussions, it has been determined that they may be a govt entity. Here are the facts as we know them.

Client had MPP for 5 years (no filings)

401(k) set up this year with PSP and MPP terminated

Client is administration staff for a govt funded DB firefighters pension plan. They are employees of the large DB plan (4 employees) and are paid from the large pension plan. The large pension plan does not require 5500s and does not report anywhere the contributions for the administration staff.

From the information we gathered, the client is not required to file any 5500s and may not be allowed to have set up a 401k plan. Any guidance would be appreciated as this was all set up before the "govt entity" issue was addressed. Can anyone with govt entity experience advise what type of retirement vehicle is appropriate for this administration group? Thanks.

[mbozek]

Govt entities are not allowed to establish 401(k) plans after June 1986. Are the administrative staff employees of the pension plan? If so the question is whether a a tax exempt qualified plan can establish a 401(k) plan. If the staff members are paid from a municipal govt payroll then I dont think they can particpate in a 401(k) plan. If the client does not file 5500s then it is because they are a govt entity which will not be eligible for a 401(k) plan.