Hello all,

I have a contact that was advised that the employer must fund 25% of a deposit in a 457(f) Plan. They (advisor) further pointed my contact to IRS *NOTICE* 2007-62 to support what they were saying. I am trying to figure out what the misfire is here. My first instinct told me they were really referring to creating an amount with a SROF substantially greater than the pay the participant could have otherwise received , but I'm sure there may be something more. Any thoughts or comments?

I have no idea. Incidentally, is the "25%" some kind of rule of thumb that will create a SRF in the eyes of the IRS? If so, I had not heard that. Who at IRS/Treasury suggested that?

The advisor referred the client to an IRS Notice for support, and that's all they pointed to. The notice, in part, talks about SROF's. The 25% number came from the Advisor.

They (advisor) claim this *IS* the percentage, period. If my assumption in my post as to why the advisor is saying this is correct, 25% may be a reasonably safe percentage to make that assertion ...but I don't believe it is an actual requirement nor do I believe this is how the overall deferral must be structured in order to obtain a long time horizon on the deferral.

A quick followup for anyone who may be reading this thread:

My initial assumption was correct - they were looking to increase the deferral period by injecting employer $ to establish additional SROF.

However, this is a tactic for the proposed 457(f) regs. The advisor evidentally thinks have already been chiseled in marble. hmmm. Anyway, the IRS has also stated that the Regs will be applied PROSPECTIVELY, so ...

The 25% - this would work .... when the Regs actually are finalized ... but as far as being some sort of established percentage: I think they were drinking out of the urinals.

Not thrilled to know I'm slowly losing my mind, but happy to know I haven't already lost it.

Getting back to my question, where/when was it stated that 25% or more is some kind of safe harbor? Or, are you just imagining that 25% is sufficient (in which case you are probably correct).

Hi jpod,

Their "advisor" was the only one that originally stated 25% - as if it was a number engraved in stone.

No regs or proposals mention it as a safe harbor. Advisor (incorrectly) thought so, though ...

I also stated my assumption that 25% appears reasonable (but I did not believe it was a hard number).

But again, in short - there is no set safe harbor number/percentage.

Thanks,
Eric