457 plus 403(b) plan

[Santo Gold]

Can an individual age 50 have a 457(b) deposit of $24,000 in that plan as well as in a 403(b) plan?

 

Thanks

[John Feldt ERPA CPC QPA]

If the 457(b) plan is sponsored by a governmental employer and both the 403(b) and 457(b) plan documents allow for catch-up deferrals, then yes, assuming these are deferrals from compensation that has not yet been received by the employee and that they are not making any other deferrals with any other 403(b), 401(k), or 457(b) plans.

The old rules that offset 457 from the 401(k) and 403(b) were for pre-2002 years, if I recall correctly.

[CuseFan]

i thought for governmental plans there was coordination between 457b and 403b, as 457 plans function closer qualified plans in that space, but i'm not certain.

Non-governmental you can clearly double up except the 457(b) must be a top hat (so execs only). 

Catch-ups are different too.

https://www.law.cornell.edu/uscode/text/26/457

[QDROphile]

Recuse yourself, CuseFan.

[John Feldt ERPA CPC QPA]

The 457(b) limit is a separate individual limit. All your 457(b) amounts (vested ER and EE contributions, or "annual deferrals") when combined together from all 457(b) plans you participate in are subjected to the individual limit under 457. There is no offset for any 403(b) or 401(k) deferrals anymore.

Your 403(b) and 401(k) elective deferrals are subject to the individual 402(g) limit (SIMPLE deferrals go under this too). It is one overall limit for the individual for all such 403(b), 401(k) and SIMPLEs that they participate in for the year. Of course any SIMPLE portion itself also has its own lower limit. I don't remember where SAR-SEP deferrals fall without looking that up, but there's not many of those around anymore.

Non-governmental 457(b) plans don't have age 50 catchups, but they can have the special last 3 years catchup to make up for underutilized prior limits when they were in the plan. Again, no offset with 403(g) deferrals or their catch-ups.

An age 50 governmental employee can put $24,000 in the 457(b) and another $24,000 in a 401(k) or 403(b), if they are eligible for such plans. Two age 50 catch-ups is correct, yes.

[Belgarath]

https://www.irs.gov/retirement-plans/how-much-salary-can-you-defer-if-you-re-eligible-for-more-than-one-retirement-plan

[JoeAvg]

Question re: accounting for a non-government 457(b) plan:

A "Top Hat" plan was set up 15 years ago, using a whole life insurance policy. Premiums over that time were expensed, while the Cash Surrender value was booked as an asset, and adjusted annually, with a matching/offsetting deferred compensation liability also adjusted annually. Premiums paid totaled $75,000 (averaging $5k/year), and when the key employee retired the CSV amounted to $103,000. Proceeds of $103k were received and were immediately disbursed to the retiree. The employer received a Form 1099-R from the insurance company, showing gross distribution to the employer of $103k, of which the "taxable amount" was $28k, and box 5 EE contributions....or insurance premiums were $75k.

So the cost of this arrangement has been recognized annually as premiums were paid and expensed. There has been no gain recognition on the employer's books for the $29k buildup from premium costs to the $103k plan distribution. Should there be? Or is it sufficient to have recognized the $75k in premiums over 15 years, and just footnote the details noted above?

Any guidance would be appreciated.