Can A Government Entity Setup A 401K Plan?

Can a government entity set up a 401k plan? Can I establish my own 401k plan if I work for the government? If I started before 1986 is 401k still good?

Government entities that have employees on any level, federal, state, county or city can not establish a 401k plan unless that plan was established prior to 1986. New legislation enacted by the Internal Revenue System prevents new 401k plans from being set up for employees after that date. Government employees can establish a 457g plan instead. The government also allows independent government contractors to establish this type of account through the government.

Can I establish my own 401k plan if I work for the government?
New legislation passed in 2001 allows a person to contribute the maximum amount allowable by law to a private 401k even if they have a 457g. There are several options that you can choose from if you are a government employee and wish to secure your retirement. If you have a 457g plan with the government though, you are not allowed to establish a Roth IRA.

What is a 457g Plan?

A 457g plan is just like a 401k or 503b plan in many ways except that it allows private contractors to contribute to the retirement and it prevents investments into a Roth IRA. The other difference is that you are not penalized for early withdrawal in this type of plan. You may also roll over a457g without penalty into another plan if you leave the employment of the government.

If I started my 401k plan with the government before 1986 is it still good?

Yes. 401k plans that were in effect prior to the cut off date of 1986 are still being honored by the different government agencies. You can roll over these plans with no consequence if you want when you leave your employment.

Related posts

1. Can I Contribute to Both a 401K and a Roth IRA?
2. Can I Contribute To A 401K And Roth Ira?
3. What Are The Limits On 401K?
4. How Much Can I Contribute To A 401K Plan?
5. Which Is Better, A 401K Or Roth IRA?

One Response to “Can A Government Entity Setup A 401K Plan?”

1. Gavin Weynand says:

   September 9, 2011 at 12:47 am

   Your website is pretty slow to display in IE.

Send this page to a friend ...

Enter friend's email address
.