457 contributions and its applicability to Section 415

[Guest Joe Hoho]

To Carol or anyone else:

Our city currently offers both a 457 deferred compensation plan and a 401(a) defined contribution plan. Our consultants have informed us that contributions to the 457 plan does not count towards the annual additions limit for Section 415. Based on this assumption, a highly compensated employee (let's say making $150,000) could contribute the maximum $8,000 towards the 457 plan and have an employer contribution of $30,000 made to a 401(a) defined contribution plan. However, our auditor seems to think that the 457 contributions count towards the $30,000 limit. Thus, they think that the maximum that could be contributed to the 401(a) plan would be $22,000.

What is your opinion on this subject? Thanks in advance!!

[Carol V. Calhoun]

457 plan contributions do not count toward the 415© limit. However, there is a complicated interrelationship of 457 contributions to contributions under a 401(k) or 403(B) plan, which should be looked at if you have either of those types of plans.

[Guest slt]

Funny that you should mention the interplay. I was wondering if anyone can point me out to any recent articles or other guidance on how to understand these rules and how they work with each other (or against!). It is impossible to understand the rules by just looking at the Code! Thanks.