Contributions beyond NRA

[Guest Thomas2006]

Can participants in a 457(b) Plan (nongovernmental) continue to make elective deferrals beyond NRA, even if such participants have utilized the special 3 year catch-up contributions?

Background: Plan is considering changing NRA from 65 to 55. While catch-ups can be made at an earlier age, will the participants also lose the ability to defer earlier? Can participants make elective deferrals beyond NRA even if they don't make catch-up contributions?

Thanks!

[Everett Moreland]

457(b) allows a participant to make elective contributions past the participant's normal retirement age, whether or not the participant has made catch-up contributions during the participant's last 3 taxable years ending before the participant's normal retirement age. See the following 1.457-4©(3)(v) as to whether normal retirement age can be lowered to 55:

(v) Normal retirement age.(A) General rule. For purposes of the special section 457 catch-up in this paragraph ©(3), a plan must specify the normal retirement age under the plan. A plan may define normal retirement age as any age that is on or after the earlier of age 65 or the age at which participants have the right to retire and receive, under the basic defined benefit pension plan of the State or tax-exempt entity (or a money purchase pension plan in which the participant also participates if the participant is not eligible to participate in a defined benefit plan), immediate retirement benefits without actuarial or similar reduction because of retirement before some later specified age, and that is not later than age 70-1/2. Alternatively, a plan may provide that a participant is allowed to designate a normal retirement age within these ages. For purposes of the special section 457 catch-up in this paragraph ©(3), an entity sponsoring more than one eligible plan may not permit a participant to have more than one normal retirement age under the eligible plans it sponsors.

(B) Special rule for eligible plans of qualified police or firefighters. An eligible plan with participants that include qualified police or firefighters as defined under section 415(b)(2)(H)(ii)(I) may designate a normal retirement age for such qualified police or firefighters that is earlier than the earliest normal retirement age designated under the general rule of paragraph ©(3)(i)(A) of this section, but in no event may the normal retirement age be earlier than age 40. Alternatively, a plan may allow a qualified police or firefighter participant to designate a normal retirement age that is between age 40 and age 70-1/2.