Grandfathered Governmental 401(k) Plan

[Guest Richard Bellamy]

I am staring at a grandfathered governmental 401(k) Plan, which I have never dealt with before. I thought some of the experts would have some advice on the following two specific issues:

1. Is there any reason NOT to recommend immeidate termination of the 401(k) and rollover into a newly created 457 Plan?

2. Grandfathered governmental 401(k) plans are not subject to various forms of discrimination testing (ADP/ACP). The plan, however, has a generic plan document that does not identify it as a grandfathered plan, and states that various ADP/ACP tests will be conducted if there is no safe harbor election. Does anyone think that this sort of language would cause a plan to "elect in" to such testing?

Thanks in advance.

[Everett Moreland]

Responding to your 1., a reason to keep the 401(k) plan is that an employee's $15,500 elective deferral limit for the 401(k) plan is in addition to the employee's $15,500 contribution limit for the 457 plan.

[QDROphile]

Plans are required to be operated in accordance with their terms. Follow the terms or change them.