multiple 457 plans

[Chippy]

Can a township sponsor more than one 457 plan? They currently have one with MetLife that one participant contributes too. They would like to open another 457 plan with Nationwide. is that allowed?

[QDROphile]

Sad common situation. The better way to look at it is that the township has one plan and has been snookered/bullied into multiple investment providers. The practical trick is how to provide for plan administation other than investment management. The two pigs at the trough probably won't cooperate.

Whether or not the township can maintain a 457 plan is a matter of state law.

[Carol V. Calhoun]

Provided that local law doesn't impose any limitations, they can have as many 457 plans as they want, so long as no individual contributes more than the maximum to all plans combined. The question is whether it makes sense to do so. If Nationwide's products are a better investment, can they just fold the one existing participant into the new plan? There may be reasons not to (e.g., the old plan has substantial fees for early withdrawal), but it's worth considering.

And if the problem is substantial early withdrawal fees, they should at least make sure the new contract doesn't have similar provisions. Having a bunch of different contracts, because there is never any way to move money from a poor investment to a better one without substantial fees, is both an administrative nightmare and an invitation to participant litigation.