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401(a) vs 401(a) "Plans"


kevin

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I am not involved in nonprofit/governmental plan admin work, but I have a question regarding references I see to "401(a) plans".  I have always viewed IRC 401(a) as a rather lengthy section containing a host of rules that apply to many types of private industry plans, and not necessarily isolated to governmental/nonprofit plans (e.g. retirement distribution rules under 401(a)(9) which apply to private plans). 

Is the term "401(a) Plan" just a way those involved in administering/working in this area distinguish certain governmental/nonprofit plans (mandatory contributions, etc) from other governmental plans, like 457(b) plans, or from 401(k) plans sponsored by private employers?

I am trying to find a good way to summarize the main purposes/provisions of IRC 401(a) but just about every article I find keeps referring to governmental, educational, non-profit 401(a) "plans". 

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5 minutes ago, kevin said:

Is the term "401(a) Plan" just a way those involved in administering/working in this area distinguish certain governmental/nonprofit plans (mandatory contributions, etc) from other governmental plans, like 457(b) plans, or from 401(k) plans sponsored by private employers?

In my experience, yes, it's largely a way to refer to a specific plan type (governmental defined contribution plan qualified under Section 401(a) that holds non-elective contributions, matching contributions, after-tax contributions) even though many other types of plans are qualified under Section 401(a).

For reference, the document provider we generally use calls this type of plan a "Governmental Defined Contribution Plan" but it's what you would typically see called a "governmental 401(a) plan." 

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And since contributions to a 457(b) plan by the governmental sponsor, not just the salary deferrals, are included in a participant's gross income for the year, what typically happens is the employee deferrals go in under the 457(b) plan, while a separate plan holds the match and nonelective contributions - hence, the 401(a) label on that one to distinguish it as "the usual type of company plan."  (And prevents those ER contributions from counting as current income to the participants.)

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29 minutes ago, Bri said:

And since contributions to a 457(b) plan by the governmental sponsor, not just the salary deferrals, are included in a participant's gross income for the year, what typically happens is the employee deferrals go in under the 457(b) plan, while a separate plan holds the match and nonelective contributions - hence, the 401(a) label on that one to distinguish it as "the usual type of company plan."  (And prevents those ER contributions from counting as current income to the participants.)

Agreed on the elective deferrals going into the 457(b) plan, and corresponding matching contributions going into the 401(a) plan, but I'm not sure I follow the rest. Employer and employee amounts deferred under a governmental 457(b) plan are taxed when paid to the participant. See Section 457(a)(1)(A).

Separating the match into the 401(a) plan allows the employee to defer the maximum amount under 457(b) without the employer match eating into the limit. 

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Ha, yeah I didn't really write that out correctly.  I meant what you wrote, but I made it sound like a town's match going right into the 457 was suddenly taxable.  Rather it counts as more deferral towards the 20,500 maximum.

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