Jump to content

Merging Gov't 401(a) plan


Recommended Posts

I have a city that is considered a second-class city in Nebraska (doesn’t have a population of more than 5k). They currently have a City Employee plan, Police Officers plan and a Firefighters plan. 

In Nebraska second-class Cities are not required to have separate plans for these different types of employees. That being the case, they would like to combined these three plans into one plan, having all current and future employees in the City employee plan. 

For the Fire plan, there’s no longer full-time firefighters, it’s a voluntary department now so no new contributions in that one - only balance is for one retired firefighter. There are police officers employed but they are getting the same contributions and vesting as the City employee plan.

I am newer to govenmental plans - are there any issues with merging these three plans I should be aware of?  A provisional comparison shows very few differences and they have already determined they would go with all the most lenient of the differing provisions.  What other issues should I be aware of, if any?  Thanks!

Link to comment
Share on other sites

Tinman, since 401(a)(12) and 414(l) don't apply, you have no federal rules on how you handle any differences in funding levels in the constituent plans. You'll need to look to Nebraska law (if there is any on point, which I doubt) and be sensitive to the issue.

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

Link to comment
Share on other sites


I agree with Luke about the nonexistence of federal limits on merging the plans. However, one reason to continuing maintaining separate plans that you might want to consider is dependent upon whether the separate groups are unionized, what each promises its members with respect to the plan for its members and the employee relations issues that might ensue if one group got substantially better benefits or was perceived to be getting better benefits than either or both of the two other groups. That said, there is nothing (subject to any state laws with respect to governmental plans) that would preclude the consolidation of the three plans into one, even if separate contribution or benefit rules apply to each separate group and the accumulated assets of each group are required to be maintained separately from the other groups, provided that there is a way of tracking to which group a particular employee belongs, having rules for what happens if an employee in one group transfers to another, etc. 

Link to comment
Share on other sites

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...