Are there any other options for a local gov. 457?

[Guest ksadler]

Other than a 457 plan, can a local (city) government offer a plan where the city matches the employee's contribution and the employee not be taxed in the current year for this matched portion? Also, is there any "loop-hole" out there where a governmental employee can exceed the $8000 limit, keeping in mind that the city also wants to contribute? I saw something on the fact that the matched portion can be pre-taxed and the ee contribution is after-tax but deferred.

[Everett Moreland]

The employer could contribute the match to a qualified plan, whether the employee contribution is pre-tax to the 457 plan or after-tax to the qualified plan. The employer's matching contribution to the qualified plan will not count toward the $8,000 limit ($8,500 next year).

[Guest bstarr@metlife.com]

CONSIDER A TSA 403(B), $ 10,500 + ANN. LIMIT.

[Carol V. Calhoun]

A 403(B) would not be available for a city government, since the employer must be an organization tax-exempt under Code section 501©(3), or a public school or university. A city government would be neither. Of course, if the city also runs the schools, employees of the schools could be covered by a 403(B).

I would concur in Everett's suggestion, if permitted by applicable state and local law. A 457 plan for pretax employee contributions, plus a 401(a) plan for the employer match, is usually the best combination if the city is not eligible for a 401(k) plan under the grandfather rules.