Deemed IRA's within a 401 a

[Guest gsm1cox]

I am trying to find out more about deemed IRA's (traditional or Roth) and if they are allowed within a 401 a?

I have found that the Economic Growth and Tax Relief Reconcilitaion Actof 2001 allows it, but I am meeting resistance

with the plan adminstrator. The plan adminstrator is saying that you can not have a Roth IRA within in a 401 a, so

I am asking for help to see whom is right in this instance.

thank you

Bryan

[Everett Moreland]

A 401(a), 403(b), or governmental 457(b) plan can be amended to include a deemed traditional IRA or a deemed Roth IRA. See Internal Revenue Code Section 408(q). Usually the power to amend a plan is with the employer, not the plan administrator. It is improbable that an employer would be willing to amend a plan to include a deemed IRA, because that would increase the employer's compliance costs and risks and fiduciary duties and risks and because there is no shortage of IRA providers.

[Guest jims]

About a month or two ago, I saw a pretty deep article on this but don't remember where. It was on the New York City Employees plan. It gave lots of info and detailed stats on how they adopted deemed IRAs for their employees and allowed employee spouse to even have contributory IRAs. Sorry I can't remember what benefit publication, but if you do some creative searching, you may find it. The head person did acknowledged it was complex and a lot of work, but the City wanted to deliver that benefit to their employees.

Since these are probably very rare, its unlikely your administrator (and most others) has any experience with it.

[Everett Moreland]

Following is a link to a brochure about the NY City Employee IRA:

http://www.nyc.gov/html/olr/downloads/pdf/...RA_Brochure.pdf