special catch up

[Scuba 401]

i am new to the world of 457. lets say i put in a new plan today and an employee is 69 years old. can they take advantage of the catch up for the prior three years even when the plan wasn't in existence?

[TLGeer]

No. The 457 catchup is the lesser of the general limitation or the unused prior year limitations. Where there were no prior year limitations under the plan, because there was no plan, there is no unused limitation. Regs. 1.457-4©(3)(iii) covers this as follows: (iii) Determining underutilized limitation under paragraph ©(3)(ii)(B) of this section. A prior taxable year is taken into account under paragraph ©(3)(ii)(B) of this section only if it is a year beginning after December 31, 1978, in which the participant was eligible to participate in the plan, and in which compensation deferred (if any) under the plan during the year was subject to a plan ceiling established under paragraph ©(1) of this section.