414v(6) and SECTION 631 of the JCWAA

[Guest Johnny]

For the over age 50 catch up, are elective deferrals to 403 and 457 plans aggregated?

Thanks,

Johnny

[mbozek]

no

[MGB]

The proposed regulations on catch ups make it clear that you only aggregate catch ups that are made to plans subject to aggregation for the underlying regular deferrals.

[Guest Johnny]

I was confused by the attached article below ... see the last two sentences of the second paragraph under the heading "Deferral Limitations".

Any other comments?

Thanks for your reply and hope your holidays go well. Johnny.

http://www.milliman.com/eb/publications/cl...in/0211_457.pdf

[E as in ERISA]

Section 414(v)(4)(B) indicates that you are supposed to aggregate all plans, including both 403(B) and 457. However, there are no limits that apply to both 403(B) and 457 plans. E.g., 402(g) limits apply to both 403(B) and 401(k) but not 457. So based on how a catchup works, you could potentially make them to both a 403(B) and 457.

[MGB]

Johnny,

I apologize for the confusion in the Client Action Bulletin that you linked to. I am the author (or primary peer reviewer) of our CABs, but this one was written by someone else in my unit and I did not catch the poorly written phrases that you referred to until after it was released. The person writing it was very familiar with the 457 regulations which the CAB was focused on, but not as well versed in the catch-up regulations which had been previously released. I thought about releasing a follow-up but decided that individual consultants knew enough to clarify to their clients the proper interpretations from the regulations. The language in the CAB reflected the understanding we had from the original law, which was changed when the regulations went in another direction allowing aggregation of only those plans that had an aggregated underlying limit.

[Guest Johnny]

Thanks for the informative clarification. - Johnny