Roth 403b deferrals and W2 from 457f plan

[30Rock]

A participant in the 403b plan is going to receive a payout under the 457f plan this year, which is included as W2 income. Can he make a Roth 403b deferrals on the deferred compensation payout? The plan uses the 3401 definition of compensation, and there are no other exclusions.

Thanks!

[rcline46]

Check the 415 amendment - it specifially mentions those types of payouts.

[30Rock]

He is still employed. The 415 amendment deals with compensation after termination of employment. In a 457f plan, once the compensation no longer has a risk of forfeiture, it becomes taxable and you can take a distribution. But often you are still employed.

[QDROphile]

Go back to rcline's advice and take it seriously. Maybe your plan overlooks the point, but the 415 regulations speak to it.

[austin3515]

I also thought the 415 regs regarding deferred comp related to post termination.

BUT, deferred compensation is a fringe benefit, so if you're document exlcudes fringe bnefits (based on the 414s safe harbor) then it is out.

[QDROphile]

Reg. section 1.415©-2©, Items not includible in compensation. Subparagrah (1). Depends on plan terms. Amounts paid after termination of employment are addressed separately under paragraph (e).

[austin3515]

Here it is:

1) Contributions (other than elective contributions described in section 402(e)(3), section 408(k)(6), section 408(p)(2)(A)(i), or section 457(b)) made by the employer to a plan of deferred compensation (including a simplified employee pension described in section 408(k) or a simple retirement account described in section 408(p), and whether or not qualified) to the extent that the contributions are not includible in the gross income of the employee for the taxable year in which contributed. In addition, any distributions from a plan of deferred compensation (whether or not qualified) are not considered as compensation for section 415 purposes, regardless of whether such amounts are includible in the gross income of the employee when distributed. However, if the plan so provides, any amounts received by an employee pursuant to a nonqualified unfunded deferred compensation plan are permitted to be considered as compensation for section 415 purposes in the year the amounts are actually received, but only to the extent such amounts are includible in the employee's gross income.

So I think it would be in then, correct? I still think the only way it would be out is if fringe benefits were excluded. The 414s safe harboe exclusion for fringe benefits lists "deferred compensation.