one man 457 plans

[Santo Gold]

I was hoping someone could provide a brief 457 "101 - Basics" and then point me in the right direction for additional information.

This is regarding an employer that I'm not really involved with: A (very) small business maintains both a 457(b) and 457(f) plans. Attorney drafted both documents and everything seems to be OK with that.

What administrative services are needed for these plan on an ongoing basis? There are no 5500s needed. Any other filings that they should be making? These are non-qualified plans, so the usual 415 and 402(g) limits wouldn't apply correct? The plan covers only the owner, so there are no testing issues. Do they need a TPA at all for something like this?

Thanks for any help.

[Kevin C]

The 457 regulations would be a good source of additional information.

Do you have more information about the plan sponsor? "Business" and "owner" are not terms that I normally associate with a governmental unit or a non-profit.

[John Feldt ERPA CPC QPA]

The 401(a)(17) limit applies to the 403(b) plan. 415 limits apply to the 403(b) plan. The 402(g) limit applies to the 403(b) plan. A separate 'annual deferral' limit applies to the 457(b) plan. Two catch-up limits may apply to the 403(b) plan, and a special catch-up may apply the 457(b) plan too, depending on the plan language. If this "business" is also in business with other related organizations, additional issues must be considered.

Slight tangent here. Hopefully the plan documents will be kept up-to-date with each new law and regulation that could affect the plan. Also, if the entity is a non-profit company, a one-time filing (a letter) to the DOL regarding the 457(b) plan is recommended (so the plan won't have to file any 5500s).

Sometimes plan sponsors think that once the document is done, that they can forget about keeping any engagement with the document drafter. However, each year there are new laws and new regulations that frequently change the language that is required by the IRS - necessary language that stops the IRS from making the plan assets becoming taxable.