ESOP & 401(K)

[Guest sgl]

A client of mine maintains both an ESOP and a separate profit sharing & 401(k) plan. The lawyer that maintains the ESOP is informing my client that they are unable to offer a 401(k) because of the ESOP. Am I missing something? I haven't been in this business that long, but I believe you can aggregate a 401(k) and ESOP for ADP/ACP testing.

Is there a regulation that I can quote or point the lawyer towards?

[A Shot in the Dark]

sgl:

More than likely the attorney is inferring that the employer will be maximizing contributions and annual additions to the ESOP and the attorney is presuming there will be little or no room for contbutions to be made to the 401(k) Plan.

Many times the employer will want to maximize contributions to the ESOP due to the debt service, etc.