Age 50 Catch up

[Guest James III]

I have an additional question in regards to EGTRRA changes with 457(B) catch ups.

Does anyone know if the Age 50 Catch up is available for both governmental 457(B) plans AND tax-exempt employers sponsoring 457(B) plans? I have been reading conflicting publications in regards to the ability to offer the Age 50 Catch up provision on tax-exempt employer 457(B) plans, and am curious what is correct.

Thanks for any opinions.

James

[MGB]

It is only availabe in funded-types of plans. Tax exempt 457(B) plans are unfunded arrangements by definition (even if funds are created to determine investment income - the fund still belongs to the employer). Therefore, 457(B) plans of tax exempt employers may not use the catch-up provisions of 414(v).

I am curious where you have seen "conflicting publications." I have not seen anything saying otherwise.

[Guest James III]

Thank you very much for that answer. When I read the code after your email it was very clear how the section referring to the Age 50 catch up references eligible employers as described in 457(e)(1)(A) which is a specific reference to Governmental plans....and does not include (e)(1)(B) which is tax-exempt organizations.

I should clarify, I haven't seen conflicting information per se, but I have seen information that just states "457 plans have the additional catch up", when they should state that Governmental plans have this additional catch up. It would appear that the tax exempt entity may only about the last three years before retirement age catch up applied in 457(B)(3)(A).

Thanks again for your opinion and clarification.

[Guest wendycatherine]

With respect to James' conflicting publications, the actual text of EGTRRA (rather than the code/regs) does not distinguish between governemental and nongovernmental 457 plans. I am curious if anyone knows where the distinction cam from.

[mbozek]

However, There are other changes that affect both types of employers, e.g., all 457 plans of both TXOs and govt employers can be divided by QDROs.

[MGB]

WendyCatherine,

The reference that James III states above is from EGTRRA (EGTRRA is just an amendment to the Code...there is no separate language outside of the Code).