Guest HKT Posted December 11, 2002 Share Posted December 11, 2002 Can a government entity or employer sponsor a discretionary profit-sharing plan? If so, under what authority? There's a government employer who currently sponsors a pension plan. The employer would like to adopt a profit-sharing plan instead of the pension plan. Any advice is appreciated. Thanks. Link to comment Share on other sites More sharing options...
jpod Posted December 11, 2002 Share Posted December 11, 2002 For purposes of the tax-qualification requirements of the Internal Revenue Code, a gov'tal employer can sponsor a profit sharing plan. Is it a problem under any other law(s)? That depends on the gov'tal employer involved and the applicable state laws regulating the affairs of that employer. Link to comment Share on other sites More sharing options...
Guest HKT Posted December 11, 2002 Share Posted December 11, 2002 The government employer performs a small, unique function. We haven't look at any applicable state laws yet. I was also hoping to find more authority or resources discussing or confirming whether a government entity can sponsor a profit-sharing plan with respect to IRC section 401(a)(27). The provision is silent regarding government employers and entities specifically, so I wanted more assurance or confirmation. Link to comment Share on other sites More sharing options...
david rigby Posted December 11, 2002 Share Posted December 11, 2002 The following website leaves a lot to be desired both visually and organizationally, but it has very good content. http://www.benefitsattorney.com Go to the drop down menu, scroll down to Charts and select "Choosing Among 401(k), 403(B), and 457(B) Plans". I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice. Link to comment Share on other sites More sharing options...
mbozek Posted December 12, 2002 Share Posted December 12, 2002 Sometimes the obvious is hard to find. Govt employers can establish a qualfied plan under IRC 401(a) the same as any other employer. Under the IRC an employer is not required to have profits in order to make contributions to a ps plan. The difference between a ps plan and MP plan is that an employer can elect to make discretionary contributions under a ps plan. The reason for the silence is that the IRC only states what is not permitted, not what is permitted. The problem is that many people look for citiations of authority for provisions which are not impermissable rather than conclude that what is not impermissible is permitted. You should review the instructions for a 5300 form which a govt employer can file to obtain a determination letter for a qualified plan. mjb Link to comment Share on other sites More sharing options...
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