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Multiple 401(a) plans


Guest tws
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May a local government entity adopt two 401(a) plans, one benefitting all employees, and a second benefitting just one group of employees. Both plans provide for mandatory employee contributions.

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Guest beccafaith

Is the second group allowed to choose which plan they want to participate in, or are they mandated to only participate in the second 401(a)?

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There are two ways to answer this question. The first is easy. Yes, you can have as many plan as you want.

The second question is harder to answer, whether those two particular plans are OK. It depends. This is fundamentally a discrimination issue. There's a multi-step process involved. First, are they in the same controlled group? Second, what are the specific design characteristics of each? Third, who is covered under each? Fourth, is that fact pattern discriminatory as to eligibility or benefits? Given the state of governmenatl plan discrimination rules, you will not be able to get those questions answered here.

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Thank you for correcting me. I don't really do qualoified plans in a governmental context, and my impression was that there were plans that were governmental under 414(d), but not covered by the moratorium. On researching the point, that category only applies to non-state plans.

Apologies to tws.

The answer to the original question is: "Yes, it may."

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