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Do I dare suggest that it's done at least one good thing?


Lori Friedman

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From 1978 - 2004, some lawyers were completely unaware of Sec. 457(f)'s existence. These individuals would create nonqualified arrangements for their tax-exempt clients, using the same documents and language as they would for taxable clients (i.e. no substantial risk of forfeiture).

Thanks to Sec. 409A, people are now becoming educated about Sec. 457(f). That's at least one good result of the new law. Anyone else who's ever discovered or had to clean up a Sec. 457(f) mess would probably agree.

Lori Friedman

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Guest Ben Wells

Unfortunately, it doesn't appear that the lawmakers who wrote 409A were aware of the existence of 457(f) either.

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Unfortunately, it doesn't appear that the lawmakers who wrote 409A were aware of the existence of 457(f) either.

Ben, you make a very good point.

Lori Friedman

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To increase the accuracy, shorten the sentence:

"Unfortunately, it doesn't appear that the lawmakers were aware."

I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice.

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They were aware of it because the Conference Agreement modified the house bill to exempt 457(b) plans from 409A. There are specific references in the conference agreement to the tax issues for 457(f) plans under 409A.

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Ben and I were being facetious, not literal.

Lori Friedman

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