Money Purchase to 401(k)

[rcline46]

I have a governmental entity (housing authority) with a pre-ERISA money purchase plan - established in 1968. The plan has Mandatory contributions, employer contributions, and provisions for matching and voluntary contributions.

The client would like to add elective (401(k)) deferrals to the plan. I see two options for them:

1. add elective deferrals to the plan since it is a pre-ERISA plan; or

2. Convert to a profit sharing plan and then add the 401(k).

Any thoughts or preferences?

[jpod]

Are they allowed to adopt a qualified CODA (after 1986)?