austin3515 Posted May 16, 2014 Share Posted May 16, 2014 Why would a non-profit have a 457(f) instead of just a regular old deferred comp plan? Because the (f) requires a substantial risk of forfeiture to avoid taxation, whereas the regular non-quals do not (at least not with respect to fed taxes--it would of course be subject to PR taxes), it seems to me that one should never use a 457f. So then, I gather a non-profit is required to use a 457(f)? Is it because anything sponsored by a tax exempt entity that is not a 457(b) is by default a 457(f)? i.e., the plan sponsor has no say in the matter? Austin Powers, CPA, QPA, ERPA Link to comment Share on other sites More sharing options...
jpod Posted May 16, 2014 Share Posted May 16, 2014 "Is it because anything sponsored by a tax exempt entity that is not a 457(b) is by default a 457(f)? i.e., the plan sponsor has no say in the matter?" Yes. Link to comment Share on other sites More sharing options...
austin3515 Posted May 16, 2014 Author Share Posted May 16, 2014 Thanks! Austin Powers, CPA, QPA, ERPA Link to comment Share on other sites More sharing options...
Peter Gulia Posted May 17, 2014 Share Posted May 17, 2014 Some executives or other select-group employees desire a 457(f) plan because one desires even more deferral after exhausting the limits of a 403(b) or 401(k) plan and a 457(b) plan. Some employers like a 457(f) plan because it requires an employment-related condition that is a substantial risk of forfeiture. An employer might see this as improving its ability to keep a desired executive. Both employers and employees use both kinds of deferred compensation as a way not to increase the salary reported on Form 990, hoping that some readers won't put together the pieces to estimate what the real total compensation is. Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com Link to comment Share on other sites More sharing options...
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