A ruling issued today dealt with a situation in which two departments of the State of Idaho had had 401(k) plans grandfathered by the Tax Reform Act of 1986. It holds that Idaho can now adopt a 401(k) plan which covers not only all of state government, but also political subdivisions of the state. The ruling treats the state and its political subdivisions as being part of one "employer." This ruling can be helpful in extending 401(k) plans to governmental employers which might otherwise appear to be barred from adopting them. It could also be useful on the general question of "who is the employer" in the context of a governmental plan. Although the ruling has not yet officially been published by the IRS, you can see a copy by clicking on the above link.

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Employee benefits legal resource site

[This message has been edited by CVCalhoun (edited 04-20-2000).]