Can both a 457(b) and a 457(f) plan be sponsored by same tax-exempt employer

[ERISAatty]

I am admittedly not very familiar with 457 plans design strategy, but am stumped on a basic issue.

I am trying to strategize a way for a 501©(3) tax-exempt orginization (not a governmental or church entity) to put away money for a retirement benefit for its executive director. Ideally, the organization would like the payout to be made in installments.

It seems to me that under 457(b), installments are permissible, but that the total amount that can be contributed in the next five years is limited.

Under 457(f), there is no limit on employer contributions, but all amounts would be taxable when payable, i.e. at retirement.

Is it possible that an employer can have a combination plan? i.e. the maximum amount is deferred under 457(b) and the rest goes under 457(f)? That way, some amounts could be paid as installments, but the rest would be taxable at retirment?

Or do aggregation rules under 457 make a combination plan impossible.

Thanks for your help!

[QDROphile]

What aggregation rules are you concerned about?

[ERISAatty]

I am looking specifically at 1.457-3(b), entitled "Treatment as a single plan" which reads:

In any case in which multiple plans are used to avoid or evade the requirements of Sections 1.457-4 through 1.457-10, the Commissioner may apply the rules under Sections 1.457-4 through 1.457-10 as if the plans were a single plan. See also 1.457-4©(3)(v) (requiring eligible employer to have no more than one normal retirement age for each participant under all of the eligible plans it sponsors), the second sentence of Section 1.457-4(e)(2) (treating deferrals under all eligible plans under which an individual participates by virtue of his or her relationship with a single employer as a single plan for purposes of determining excess deferrals), and Section 1.457-5 (combining annual deferrals under all eligible plans).

I'm hoping that this means that all of an employer's 457(b) plans would be aggregated, but that the co-existence of a 457(b) plan and a 457(f) plan would not be interpreted to made the 457(b) plan ineligible.

(But I'm a newbie in this area).

[QDROphile]

I think you may take some comfort from the application of of 457(b) to an "eligible deferred compensation plan" and the application of 457(f) to a plan that is not an eligible deferred compensation plan. Also, I think the regulations in question relate to eligible plans. Compare 1.457-11.