Employer Provided Retirement Benefit for 501 (c)(6)

[Guest hcs]

If a 501 ©(6) organization wanted to provide an employer provided retirement benefit to one of its key executives, what would be the tax implication to the participant? Would the "promise to pay" be governed by section 457? Everything I read on section 457 plans describes deferrals by the participant. What are the tax implications to the executive from an employer provided defined beneift plan?

[mbozek]

All NPs are subject to IRC 457 which permits two types of plans. An eligible plan under IRC 457(b) allows a tax deferral of up to 13k on a vested basis for members of the top hat group. This amt will increase by 1k a year for the next 2 yrs. The contributions may be made by either the employee or employer. Amts in excess of 13k can be deferred under an ineligible plan of IRC 457(f) in which the benefits are subject to a substantial risk of forfeiture as long as the employee performs substantial service for the employer. I dont understand your reference to a DB plan since any deferred comp benefit would be subject to the above limits, e.g. limited to 13k in 2004 or be forfeitable until termination when it would be taxed as a lump sum.

[Guest hcs]

Thanks for the response. If the NP entered into an agreement whereby they would pay the executive a specified retirement benefit, would this automatically fall under 457 jurisdiction?

[mbozek]

Yes.