The steps outlined in IRS Revenue Ruling 2004-55 can be used with employers that have a noncontributory plan
and are willing to take on the minimal administrative work involved.
While this makes sense in respect of a contributory deferred compensation arrangement where amounts set aside for the benefit of an employee are also beyond reach of the employer's creditors, it does net follow that a contributory plan must be treated the same as a noncontributory plan
Virginia and Wyoming converted noncontributory plans
to ones that require employee contributions.
12 These noncontributory plans
covered nearly 96 percent of employees working for companies that reported having a pension plan.
As shown in table 4, noncontributory plans
were less likely to apply deductibles than contributory plans.
In noncontributory plans
, premiums are fully financed by the employer.