multiple 457 plans

[Guest slt]

Do the contribution percentages and limitations of Code section 457 plans apply separately to each 457 plan or to all 457 plans (assuming someone is a participant in more than one 457 plan)? Thanks!

[Guest Tom Geer]

They should be aggregated. See the following from Regs. 1.457-1(a)(2).

(2) Maximum deferral; in general. Under section 457©(1), the

exclusion from gross income described in this paragraph (a) does not

apply to compensation deferred under one or more eligible plans to the

extent that the compensation so deferred during a participant's taxable

year exceeds the greater of--

(i) $7,500, or,

(ii) As applicable, the sum of the plan ceilings determined under

Sec. 1.457-2(f), to the extent such sum does not exceed $15,000.

This does not mean that exceeding the limit in multiple plans but not in any one will make the plan disqualified. Rges. 1,457-2 talks in terms of limits under the plan. If there is a single employer or related employers that might cause a disqualification, but if there are multiple employers you'd probably be OK to correct as a qualified plan does under 402(g).

I've never actually had such a situation come up, so any input is more than welcome.

[Guest slt]

Thanks so much Tom. I totally agree with you. I saw that language in the regulations but was afraid that EGTRRA or some other law had made changes to the law that weren't reflected in the regulations (since, the $7,500 limit clearly does not apply anymore).

I was originally afraid that since the cite was to 457©(1), what was meant by "or other eligible plans" was 401(k) plans and 403(B) plans (since deferrals under those plans used to count for purposes of the dollar limit and were covered under 457©). But, I think you can read 1.457-1(a)(2) with 1.457-2 to arrive at Tom's conclusion. Clearly, from the language in parentheticals in 1.457-2(a), the IRS means other 457 plans and not 401(k) plans when it states "or other eligible plans."

Let me think about the "exceeding the limit" issue....

[Guest Tom Geer]

Right. "Eligible plan" is the proper name of a 457(B).