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That;s why they let Tom literally "write the book."

I agree, 100%. There is a 410(b) issue. That issue actually jumps out on the first read. I was trying to determine whether or not there was another "hypothetical" issue that would question deductibility. The title of the original post mentioned 410(b), but the question when on to ask about making the maximum deductible contribution. The deductibility limit is going to increase from $25,000 to $30,000 when you implement the fail safe - or 11(g) amendment to bring the other participant into the 'benefiting' group. I was trying to address the deductiblity while admittedly ignoring the obvious 410(b) issue; which was more of a theoretical answer than a pragmatic approach to the issue. But, I agree with you 100%. Good Luck!

My understanding was if the current asset custodian (Merrill Lynch in this case) was unwilling to serve as a QTA (which I'm learning is the position of many/most major investment institutions)the assets could be transferred to a different institution (has to be qualified to hold IRAs). I've learned that Penchecks may have offer QTA services but haven't confirmed yet.

ETA: The non-key employee terminated employment and wasn't employed on the last day. So it would appear that either the non-key is brought back in because the plan has fail safe language or the plan will need an -11g amendment.

Is the Key an HCE? Does the Plan have fail safe language for 410(b)? Is the Plan's allocation formula cross tested, pro-rata or integrated? What dos the plan document say?

With no research, I'd say probably yes - I assume the AB plan has at least one employee participating? If so, both plans are part of the required aggregation group for TH purposes, since at least one key employee participates in both. But I'd have to do a little checking to be sure...although I should probably remember this off the top of my head, I don't...

Governmental pension plans are exempt from regulation under ERISA, See Daniels-Hall v. National Education Association, 2008 WL 2179530 (W.D Wash). They are also exempt from the Uniform Prudent Investor Act. State and local government retirement plans are subject to state fiduciary rules that apply to public plans, e.g, CA. However, some states such as FL exempt plan officials from liability for performing their official duties under the doctrine of soverign immunity. FL AGO 89-63.