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Private Letter Ruling for 457 Plan?

Guest Mike

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Just found your message board recently and appreciate it very much. I'm new to government plans, and find the topics and comments here very useful.

I recently restated a 457 plan for a local government subdivision to reflect the SBJPA amendments, including addding a trust.

The original 457 plan document was provided by the investment company and the plan has been amended and restated several times over the years.

The client has never sought a ruling from the IRS regarding the plan, but now wants to know if that's advisable

Question for you folks - do you recommend always seeking an IRS letter ruling to "bless" a 457 plan in all cases, or is a ruling only necessary if the plan has unusual provisions? This is a pretty "plain vanilla" plan, with only employee contributions. What is the general comfort level of practitioners of not having a ruling?

I'd appreciate any thoughts or comments.

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No, you don't need to get a PLR. But, there is nothing which prohibits an entity from seeking one. It just takes a little time and it costs a little money. If the entity wants to pay for it ...

As you suspect, the more mainstream the plan, the less a PLR is needed. Simply make sure that it follows the code and the regs. You may also want to refer to Rev Procs 98-40&41. 98-41 gives specific language which can be used and relied on.

Also, if this entity's plan is modeled after a plan which has already received a satisfactory PLR (they're everywhere on LEXIS), the comfort level that the entity's plan is OK increases. But remember standard PLR caveat which states that only the entity to whom the PLR was issued may absolutely rely on it.

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Guest PeterGulia

Beyond the considerations mentioned by others, the plan sponsor should consider whether state law requires the local government to obtain an IRS ruling.

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  • 1 month later...

I have a question about the practical aspects of creating a trust for a governmental section 457 plan. For example, must a Form 990 be filed? Is there a need to get from the IRS an EIN for the trust? Finally, are there any other filing requirements re the plan? Considering this is a governmental plan, ERISA does not apply-hence, no Form 5500 filing.

Have I missed anything?

Any assistance will be greatly appreciated.

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