Funded or Unfunded 457(f) Plan

[Guest Lawrence_Groves]

I just received a plan that purports to be a 457 (f) plan of deferred compensation. The exhibit to the Coprorate Resolution setting up the Plan states that the Company will set up an account with $1,000,000 in it in order to pay the deferred compensaion of participant P. D.. The company will purchase $1,000,000 in deferred annuities in the company's name and pay P.D. the earnings of the $1,000,000 at the vested intervals of 5 yrs-50% and 10 years-100%. If P.D. quits in less than 10 years, then all is forfeit.

Is this plan funded or unfunded?

[four01kman]

Would you believe "informally" funded. The asset belongs to the organization, but there is a contingent liability. Funding the plan normally would mean the asset belongs to the individual, subject to forfeiture. Unfunded generally would mean no assets to support the promise to pay.