Can an employer maintain both a single employer plan and a qualified retirement plan and make deductible contributions to both plans?
Yes. There is no reason why both plans cannot operate in tandem in the same company because each accomplishes its own separate purpose. One is for providing life insurance and post retirement medical benefits, whereas the other is aimed at providing retirement benefits. A Plan should not be considered as a replacement for a qualified plan, but rather as a separate plan to accomplish another goal. If an employer maintains an existing qualified retirement plan, that plan should be continued after adoption of a Plan, so that it is clear that the purpose of installing the Plan is not to supplant or replace the retirement plan. If the retirement plan has life insurance as one of its investments, consideration may be given to terminating the insurance portion of the retirement plan, once the life benefit in the Plan becomes effective. Contributions to the post retirement plan reduce the contributions that are deductible dollar for dollar to a defined contribution plan.
