Jump to content

Government DC plan


Recommended Posts

Can a money purchase dc plan maintained by a municipality offer elective salary deferrals and matching contributions in addition to 457(b) plan?  Not eligible for 403(b) or 401(k), so I think not.  Am I missing something?

Link to comment
Share on other sites

Salary deferrals in a 401(a) plan can be provided only pursuant to Internal Revenue Code section 401(k), and governmental entities are not permitted to have 401(k) plans unless they had one back in 1986.  And even if they had one back then, it would have to be a profit-sharing plan unless it was a pre-ERISA money purchase plan.  So for the vast majority of governmental entities, salary deferrals would not be permitted in the kind of plan you describe.

However, matching contributions are permitted.  For example, in a 457(b) plan, any employer contributions directly to the plan would count against the maximum limit on contributions to a 457(b) plan ($19,500 in 2020).  What many governmental entities do is to have employee deferrals made to the 457(b) plan, but to have contributions matching those 457(b) deferrals made to a money purchase or profit sharing 401(a) plan.

Employee benefits legal resource site

The opinions of my postings are my own and do not necessarily represent my law firm's position, strategies, or opinions. The contents of my postings are offered for informational purposes only and should not be construed as legal advice. A visit to this board or an exchange of information through this board does not create an attorney-client relationship. You should consult directly with an attorney for individual advice regarding your particular situation. I am not your lawyer under any circumstances.

Link to comment
Share on other sites

  • 1 year later...

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...