Amending a 457(b) - Add Distrib options

[austin3515]

The plan currently allows only lump-sums 60 days after date of term. All participants are currently active with no plans to leave or retire. 

I assume no one has a problem with me adding a) the ability to defer the distribution of an account following termination of employment, or b) adding installment options? 

All of those pesky rules that make this essentially impossible in a 409A do not apply here.

 

 

[Luke Bailey]

Austin 3515, 409A does not apply to 457(b) plans. See IRC sec. 409A(d)(2)(B).

The 457(b) regs (see mainly 1.457(b)-7) don't have rules like the 409A rules that treat amendments in some circumstances as de facto elections, so you should generally be able to add distribution options such as those you describe. The distribution rules under 1.457(b)-7 are not as flexible, of course, as for qualified plan so you must carefully adhere to their requirements.

[Patricia Neal Jensen]

Agree with Luke.  I would be careful to require an election to use such distributions at least 30 days prior to the constructive receipt event (termination in this case).