457(b) Governmental vs Private?

[Guest Monster]

Can an employer that identifies itself as having a 457(B) plan be either Governmental (thus subject to the SBJPA) OR a Private/Top Hat plan? I'm pressed for time and struggling to find a black & white answer. Any help would be appreciated.

[Carol V. Calhoun]

Yes. (Is that black and white enough for you? )

Code section 457(B) permits either a state or local government, or a tax-exempt organization, to maintain a 457(B) plan. However, the 457(B) plan of a tax-exempt nongovernmental employer's plan is required to be unfunded under section 457(B), while that of a governmental employer is required to be funded under 457(g). A tax-exempt organization will nevertheless often maintain a trust fund or annuity contract to hold 457 plan assets, but the trust fund or annuity must be set up in such a way as to be subject to the claims of the employer's creditors (e.g., a "rabbi trust").

Morover, because of ERISA restrictions, a nongovernmental 457 plan must be a top hat plan. By contrast, many governmental 457 plans cover rank and file employees.

[Guest Ralph Amadio]

A caveat: If you become "creative" be careful in a governmental plan not to breach the "f" default.