What is the difference between a 401(k) plan and a 401(a) plan?

[Guest Blueglass]

I really don't understand the difference between a 401(a) and (k) plan. I hear people contribute to a 401(a) plan. Thanks...

[Appleby]

401(a) is the Section of the Internal Revenue Code (IRC) under which plan must operate in order to earn and maintain the status of “qualified plan”. 401(k) plans – which includes a salary deferral feature under Section 401(k), is a subset of 401(a) plans.

[Jon Chambers]

Many after-tax contributory programs (particularly with governmental employers) are referred to as 401(a) plans (to distinguish them from 403(b)s and 457s). So one possible distinction is that 401(k) contributions are pre-tax, and 401(a) contributions are after-tax. Note that this is not necessarily the case--many 401(a) plans have no employee contributions, just pre-tax employer contributions, and, as previously noted, 401(k) plans are a special type of 401(a) plan.

[Guest Blueglass]

Thank you so much! Finally someone could explain the difference between the two plans. Thanks again!

[Guest Boilerburm]

In additional to Jon's post, many sponsors who have a 403(b) plan match those deferrals in a separate plan, or make a separate employer non-elective contribution. They often refer to that piece of their overall benefit arrangement as the 401(a) plan, since it has separate 5500 requirements, etc. That's where I have heard the term most frequently.

[g8r]

I agree with the prior posts that a 401(a) plan is the term used for governmental plans that aren't subject to ERISA.

However, one thing that has confused me is that many of the 401(a) plans have employer pick-up provisions under 402(h). The plans provide for mandatory employee contributions and the employer picks these up so that they in essence become pre-tax contributions by the employee. It sounds very similar to a 401(k) or 457 arrangement.

[mbozek]

Pick ups are permitted only for govt. qual plans under IRC 414(h). However, pick up contributions are mandatory- employees cannot elect to make contributions.