Can deemed IRA contributions be invested in an unregistered group annuity contract sold exclusively to 401(k) plans? Is there any source that provides either way?

What is an unregistered group annuity contract? Group Annuities are insurance policies which are approved by state insurance departments.

An unregisterd group annuity contract is a variable annuity contract that, because of an exemption under the Securities Act, is not required to be registered. I should have made it clear that the contract is a variable annuity contract.

Why would deemed IRA contributions be any different (under securities laws) than employee salary deferral contributions? I don't believe that they are.

The decision to claim an exemption for the sale of a variable annuity to 401(k) plans is fraught with peril. All it takes is one client's plan being operated incorrectly (and therefore, by definition, not "qualified") and the insurance company is in violation of securities laws.

To have a deemed IRA, the plan as a whole must have a trustee who is authorized to act as an IRA custodian.

That means individual trustees (owner, etc) are not allowed for deemed IRAs. You need to read the regs the IRS published on them.

I don't think any corporate trustee would approve of IRA monies in a vehicle which is only sold to 401(k) or other qualified plans. In fact, IRA money would instantly 'blow up' the product as you describe.

So... Ask the question of the investment provider, and ask the question to the proper trustee of the plan.

The trustee of the plan will determine whether investing in a unregistered annuity is a permissible investment. Most trustees will not deal with any investments that are not registered under the Federal Securities laws. Second the funds can be invested in an IRA annuity outside of the plan.