I have been told that giving certain employees (but not others) a choice between participating in a DP plan and a DC plan could potentially create a CODA situation?

What does that mean (very basically) and why is that bad (what are the consequences to each of the plans/employer/employees who participate)?

What is a DP plan?

nadiarott,

CODA is an acronym for Cash of Deferred Arrangement. Under certain conditions, giving people the option to take something or not take something could be viewed as an arrangement subject to testing under 401(k) discrimination testing rules. This is merely a fringe consideration in the situation you presented. That is why I said potentially or possibly. Others can speak more fluently to this issue than I can without brushing up on the regulations.

Janet, she meant DB plan.

should be DB plan - my apologies.

It might depend on things such as type of entity. Is this a governmental entity or what?

No, not a governmental entity - it is a nonprofit corporation