Unused Paid Time Off Contributed to 457(f) Plan?

[waid10]

Hi.  We have a 457(f) plan.  An executive with a lot of PTO banked has asked whether the unused PTO can be transferred into his 457(f) plan account.  Is this permissible?  Currently the plan is silent to this, but I imagine it could be amended (if it is legally permissible).

Thanks for any guidance.

[Luke Bailey]

waid10, take a look at Prop. reg. sec. 1.457-11(c) and (f). Query whether allowing this would cause your PTO plan to ceased to be a bona fide leave program. Also, the exec would have to be substantially nonvested, so query whether he or she would really want to do that, or whether it would be nonvested if elected.

[waid10]

Luke - I’ll take a look at that Reg. The other thing I was thinking about is the fact that the 457(f) is all employer contributions and if this PTO contribution was permitted, isn’t it really an employee contribution?

[Luke Bailey]

Well, that raises the whole issue of elective deferrals and whether anyone would ever want to subject to a real substantial risk of forfeiture, and the effect of that.