First of mo. req. for contrib elections & chgs

[Guest RGlaser]

I see that IRC §§457(b)(4) holds that:

"... the term 'eligible deferred compensation plan' means a plan established and maintained by an eligible employer...which provides that compensation will be deferred for any calendar month only if an agreement providing for such deferral has been entered into before the beginning of such month."

It seems reasonable to expect that somebody makes an election to defer before they have an opportunity to receive the deferred compensation in hand, but why must the election be made before the beginning of any particular month? Does this mean that any changes must also be made prior to the beginning of the month in which the change takes effect? Is this just "old" law that has not been updated for current technology and recordkeeping practices?

Thanks,

Ruth

[mbozek]

Actually it is pretty reasonable compared to the recently enacted IRC 409A for NQDC plans of for profit companies which requires a deferral election before the beginning of the tax year. It seems like the new law of 409A is more restrictive than the old law of 457.