Article on Governmental Section 457 Plan Changes Available Online

[Guest CVCalhoun]

The IRS has indicated a concern that although all governmental section 457 plans must be amended on or before January 1, 1999 to meet new trust requirements, many employers are unaware of this requirement. An article from the October 19 RIA Pensions & Benefits, which discusses what the requirements are and pitfalls in implementing them, is now available online by clicking here.

[Guest Eads]

Those of us in Pennsylvania are dealing with a quandry. The federal requirements mandate the placing of 457 assets into trust. However, state statute prohibits local municipalities from placing assets into trust, and specifically mentions 457 plans. I have not heard of any movement on the part of the state legislature to legally allow compliance with federal law. Has anyone found a way around this problem? For instance, would custodial accounts fall under the definition of "trust"? Today, someone said that the federal government is considering moving back the 1/1/99 deadline for compliance. Has anyone else heard anything about this?

[Guest CVCalhoun]

Actually, last I heard, the Pennsylvania legislature was considering a bill to deal with this problem. You might wish to check with the legal staff at your state retirement systems as to the status of that legislation. Let me know if you need the name of someone to call there.

As to a delay, IRS officials are saying that a delay is not under consideration. However, there is precedent for them saying that until a few days before the deadline (or in some cases, after the deadline), and then extending it anyway.

[Note: This message was edited by CVCalhoun]