new 457 rules for school employees

[Guest calmum]

new rule changes effective has clear advantages for school employees(elimination of coordination rules etc.). New York state requires govermental 457 plans to create a deferred comp board and pass assets through a trust agreement. Are schools considered governmental for this purpose? Would a trust be required or would a group annuity arrangement be acceptable? Thanks for the input

[Carol V. Calhoun]

Are we talking about public schools or private schools? In the case of a public school, the Internal Revenue Code would require use of either a trust or an insurance/annuity arrangement to hold 457 plan assets. In the case of a private school, the Internal Revenue Code would impose serious tax detriments if either a trust or an insurance/annuity arrangement were used to hold 457 plan assets, unless such trust or insurance/annuity arrangement were subject to the claims of the employer's creditors.

[Guest calmum]

Thanks for the input. The question centered on the public school theme. New York State does not recognize the group annuity contract for state/municipal eligible 457 plans without a trust as a pass through vehicle and a deferred comp board. Of course the state offers their"own" endorsed plan without the trust requirement. My thinking is that this arrangement for new public school eligible 457 plans would mirror state/municiple plans. Is that accurate?

[Carol V. Calhoun]

Alas, not being admitted to the bar in New York, I'm not able to express an opinion as to what New York law would require. It's clear that federal law would permit New York to impose such requirements; the issue is whether it has.