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Government DC plan


Car23
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Salary deferrals in a 401(a) plan can be provided only pursuant to Internal Revenue Code section 401(k), and governmental entities are not permitted to have 401(k) plans unless they had one back in 1986.  And even if they had one back then, it would have to be a profit-sharing plan unless it was a pre-ERISA money purchase plan.  So for the vast majority of governmental entities, salary deferrals would not be permitted in the kind of plan you describe.

However, matching contributions are permitted.  For example, in a 457(b) plan, any employer contributions directly to the plan would count against the maximum limit on contributions to a 457(b) plan ($19,500 in 2020).  What many governmental entities do is to have employee deferrals made to the 457(b) plan, but to have contributions matching those 457(b) deferrals made to a money purchase or profit sharing 401(a) plan.

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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