Retirement Services Defined Contribution Plan (401-a)

The Pennsylvania Municipalities Pension Trust is pleased to offer a new type of pension plan to meet the changing needs of our member townships. PSATS, in partnership with Summit Financial (a HUB International Company) and Nationwide Financial, is offering a Defined Contribution Plan to PSATS members.

What is a Defined Contribution Plan (401-a)?

It is a qualified plan that allows contributions by the township. The township will determine who is eligible, the vesting schedule and who is responsible for making the investment decisions (township or employee). Contributions by the township can be a percentage of pay or a flat annual dollar amount. The value of the account is based on the contributions made by the employer and the investment earnings.

Who Can Participate?

The township will determine who is eligible to participate in the plan. To be eligible for state aid reimbursement, an employee must work a minimum of 35 hours per week. For new plans, the township must fund the plan for three full calendar years before the plan is eligible to receive state aid.

Can the Employee Also Contribute to the Plan?

Yes, an employee may make contributions to a 457(b) Deferred Compensation plan. The two plans will work together to build toward a more secure retirement.

What are the Advantages?

  • Township contribution levels are more predictable and make the budgeting process easier
  • Township contribution can be subject to a vesting schedule based upon years of service
  • Township can choose to make investment decisions or transfer that responsibility to the plan participants
  • Participants can be allowed to have control of investments to meet individual goals
  • Employees can more easily determine their benefit/account balance at any given time via the Nationwide website 24/7
  • Learning tools are available 24/7 online with Nationwide
  • Participant assets can be transferred to another qualified plan without tax upon termination of employment
  • Participant financial reports will be mailed quarterly

How do I enroll my township in the Defined Contribution Plan?

This type of plan is governed by Act 44 of 2009, which states that a pension administrator is a professional service provider. A municipality’s first step in the procurement of a pension administrator is the preparation of a Request for Proposal (RFP). Contact Diane Calhoun at the PSATS Trustees Insurance Fund for an RFP template. You may reach her by email at or by calling (800) 382-1268.