457 and 401k

[Guest breakwater]

I have a client who owns both a for profit and a non-profit business. There are 3 owners who currently max out contributions for the 401k and are inquiring about their options to increase contributions. My first thought is to suggest a 457 plan for the non-profit, so they can max out contributions to that as well. Any thoughts or suggestions? Any things I may have not thought about?

[Locust]

I don't think individuals can own a nonprofit company. The nonprofit could have a 457 plan but it would have to be restricted to the top hat group (top executives) and it would have to be unfunded.

It sounds to me like there might be some confusion over the status of the nonprofit. Is this a foundation controlled by an individual? Is that why it is considered "owned" by the individuals?

[Guest breakwater]

The non-profit is managed by two people who also own the for profit business.

[Guest breakwater]

Does anyone know of a good reference sight that will give me the information I need to know about a 457 plan for this non-profit?

[Guest mjb]

IRS publication 525 P 8, available at www.irs.gov.

[GBurns]

Don't you first need to clarify both "own" and "operate" as those terms apply to these individuals and the non-profit in order to determine if there can be a 457 Plan ?

If they do own, as in have all the stock, then it might not even be a non-profit. If they do not but really operate, they might not even be employees but might be the senior Board members or something else.