Public School District: 401(k)?

[Guest Thornton]

Is a public school district permitted to establish a 401(k) plan, or is it considered a state/local government entity and able to establish a 403(B) only? Thanks.

[Ellie Lowder]

Governmental groups (includes public education) cannot establish new 401(k)plans. Some do have old grandfathered plans (established before May of 1986). Public Education employers can establish 403(B), 457(B), 401(a)plans. Most do sponsor 403(B) plans - many also sponsor 457(B) plans, either locally if permitted by state statue - or through the state deferred comp plan.

[MGB]

Also, if you are asking about a Wisconsin district (given you are from Wisconsin), no district can create a 401(a) plan. Only the State of Wisconsin, County of Milwaukee and City of Milwaukee are allowable plan sponsors under state law. The law also requires mandatory participation in the state plan. That is why every municipality, school district, etc. is part of the state plan.

[Guest Thornton]

Thanks for your responses. I thought I knew the answer, but wanted some confirmation. I was kind of aware of the state restiction on 401(a) plans, but do little work in this area. School districts in Wisconsin are apparently able to set up 401(a) plans for non-teaching support staff. I have run into several with money purchase plans for support staff, all using annuity products. Thanks.