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Benefits in the News > By Subject >

457 plans


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An Overview of Section 457 plans
"What is a 457 plan? ... Who can establish a 457 plan? ... What types of 457 plans are available? ... Are there contribution limits for 457 plans? ... Can an employee contribute to a 457 plan and a 401(k) or 403(b) plan? ... What are some of the advantages of participating in a 457plan? ... What are the differences between a non-governmental 457 plan and governmental 457 plan?" (Butterfield Schechter LLP)
A Primer for Plan Sponsors: 457(b) and 457(f) Plans
"[1] What is a 457(b) plan? ... [2] What are the contribution limits for 457(b) plans? ... [3] What are the distribution rules for 457(b) plans? ... [4] What is a 457(f) plan? ... [5] What are the contribution limits for 457(f) plans? ... [6] What are the distribution rules for 457(f) plans? ... [7] Which employers can offer non-governmental 457(b) and 457(f) plans? ... [8] Why would an employer use a 457(b) or 457(f) plan?" (Strategic Benefit Services)
[Guidance Overview] 2017 Compliance Checklist for Qualified Plans Not Subject to ERISA (PDF)
20 pages. "The Compliance Checklist incorporates requirements for governmental and nonelecting church plans, non-ERISA 403(b) plans, 457 plans and nonqualified executive benefit plans, and provides information on the materials that you will need to file, filing due dates and agencies to which the filings should be made." (Prudential)
GASB Statement 84 Provides 'Fiduciary Activity' Guidance for Governmental Entities
"[F]iduciary activity occurs when the governmental entity controls plan assets and has a fiduciary relationship with plan beneficiaries.... According to [GASB Statement 84], a government controls the assets of an activity if it holds the assets or 'has the ability to direct the use, exchange or employment of the assets in a manner that provides benefits to the specified or intended recipients.' ... The statement also includes separate criteria to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities." (Bloomberg BNA)
[Guidance Overview] Attention, California School Districts: You Are Fiduciaries for Your 457(b) Plans
"Since 457(b) plans are deferred compensation plans for state and local governments, 457(b) plans satisfy the definition of public pension and retirement funds for purposes of the California Constitution. This means that the retirement boards, and their members, who are responsible for 457(b) plans ... are fiduciaries subject to the duties and obligations under Article XVI, Section 17." (The Teacher's Advocate)
[Guidance Overview] SEC Extends Rule 482 Relief to Non-ERISA Retirement Plans
"While Rule 482 under the Securities Act permits information about investment companies to be provided to investors without being accompanied or preceded by those companies' full prospectuses, DOL-required disclosures did not comply with all the conditions for reliance on Rule 482. Nevertheless, the SEC staff issued a no-action letter in late 2011 under which it agreed, for ERISA plans, to treat the DOL-required disclosures as if they satisfied the conditions of Rule 482. The SEC staff's February 18 letter extends that position to cover provision of the same disclosures required by the DOL rule to participants and beneficiaries in plans that are not subject to ERISA, thus permitting reliance on Rule 482 for such disclosures." (Carlton Fields)
What Employees Need to Know About Section 457 Plans
"As with 401(k) plans, participants in 457 plans have pretax contributions deducted from their paychecks.... Unlike the majority of large-company 401(k) plans, however, most 457 plans don't match employee contributions. Public-sector employees are more likely to receive a traditional pension than private-sector workers. Those two factors may explain why only about 55 percent of public-sector employees with access to a 457 plan contribute to it." (Chicago Tribune; subscription may be required)
[Guidance Overview] Pension Plan Limitations and Other Applicable Limitations for 2017
"Many of the pension plan limitations were increased, as the increase in the cost-of-living index met the statutory limits that initiate their adjustment. However, some limitations remain unchanged. [This article provides] a summary of some of the limitations." (Trucker Huss)
Proposed Deferred Compensation Plan Rules May Aid Tax-Exempt Hospitals
"Under the proposed regulations, an executive can agree to defer a portion of his or her compensation to a later year in return for an agreement to provide two years of substantial services or an agreement not to compete with the nonprofit for two years. Additionally, the proposed regulations require the compensation paid out to equal more than 125 percent of the amount that the executive agreed to defer." (Bloomberg BNA)
[Official Guidance] Text of IRS Announcement 2016-39: Retirement Plan Distribution Relief for Victims of Hurricane Matthew (PDF)
"[A] qualified employer plan will not be treated as failing to satisfy any requirement under the Code or regulations merely because the plan makes a loan, or a hardship distribution for a need arising from Hurricane Matthew, to an employee or former employee whose principal residence on October 4, 2016, (October 3, 2016, for Florida) was located in one of the counties identified for individual assistance by [FEMA] because of the devastation caused by Hurricane Matthew or whose place of employment was located in one of these counties on that applicable date or whose lineal ascendant or descendant, dependent, or spouse had a principal residence or place of employment in one of these counties on that date. These counties identified for individual assistance by FEMA are in Florida, Georgia, North Carolina and South Carolina and can be found on FEMA's website ...

"Plan administrators may rely upon representations from the employee or former employee as to the need for and amount of a hardship distribution, unless the plan administrator has actual knowledge to the contrary, and the distribution is treated as a hardship distribution for all purposes under the Code and regulations ...

"[A] 'qualified employer plan' means a plan or contract meeting the requirements of Section 401(a), 403(a) or 403(b), and ... a plan described in Section 457(b) maintained by an eligible employer described in Section 457(e)(1)(A), and any hardship arising from Hurricane Matthew is treated as an 'unforeseeable emergency' for purposes of distributions from such plans....

"To make a loan or hardship distribution pursuant to the relief provided in this announcement, a qualified employer plan that does not provide for them must be amended to provide for loans or hardship distributions no later than the end of the first plan year beginning after December 31, 2016. To qualify for the relief under this announcement, a hardship distribution must be made on account of a hardship resulting from Hurricane Matthew and be made on or after October 4, 2016, (October 3, 2016, for Florida) and no later than March 15, 2017." (Internal Revenue Service [IRS])

[Guidance Overview] IRS Information Release 2016-138: Retirement Plans Can Make Loans, Hardship Distributions to Victims of Hurricane Matthew (PDF)
"Participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures.... Currently, parts of North Carolina, South Carolina, Georgia and Florida qualify for individual assistance." (Internal Revenue Service [IRS])
[Guidance Overview] The Proposed 457(f) and 409A Regulations: A Closer Look
"When IRC section 409A and its related regulations came into being, it was thought that this might be the beginning of the end for the use of so-called 'rolling risks' for forfeiture in 457(f) plans.... The proposed 457(f) regulations make it clear that rolling risks of forfeiture continue to be permitted, but that substantial future services must generally be performed for at least two years (among other restrictions), and that the present value of the deferred compensation must be at least 125% of the compensation that the employee would have received had the agreement not been extended." (Cammack Retirement Group)
How to Prepare for an IRS Audit of Your 403(b) or 457(b) Plan (PDF)
13 pages. Includes: [1] How employers can prepare for an IRS Audit of their 403(b) and/ or 457(b) Plan, [2] potential areas of focus during an IRS examination, and [3] best practices for strengthening tax compliance. (National Association of Government Defined Contribution Administrators [NAGDCA])
[Guidance Overview] IRS Issues Proposed Regs for Executive Deferred Comp Plans of Tax-Exempt Organizations
"The proposed regulations provide important guidance and clarification in areas that have been unclear for practitioners and the organizations maintaining plans for executives. The regulations address substantial risk of forfeiture and severance as well as providing clarification regarding short-term deferrals and the interaction between sections 457(f) and section 409A." (EisnerAmper)
[Guidance Overview] IRS Says Employees of Disregarded Single-Member LLC May Participate in Parent's 403(b) and 457(b) Plans
"[GCM 201634021] provides that employees of a single-member LLC treated as a disregarded entity must be allowed to participate in a section 403(b) plan sponsored by its parent 501(c)(3) tax-exempt organization. The LLC may also be allowed to participate in a 457(b) plan sponsored by such a parent." (Seyfarth Shaw LLP)
[Official Guidance] Text of IRS Ann. 2016-30: Relief for Victims of Louisiana Storms (PDF)
"This announcement provides relief to taxpayers who have been adversely affected by the recent storms and flooding in Louisiana that began August 11, 2016, (Louisiana Storms) and who have retirement assets in qualified employer plans that they would like to use to alleviate hardships caused by the Louisiana Storms. In addition, this announcement provides relief from certain verification procedures that may be required under retirement plans with respect to loans and hardship distributions.... The parishes included in the covered disaster area for the Louisiana Storms are identified in the News Release issued by the IRS for victims of the storms and flooding in Louisiana ... Plan administrators may rely upon representations from the employee or former employee as to the need for and amount of a hardship distribution, unless the plan administrator has actual knowledge to the contrary, and the distribution is treated as a hardship distribution for all purposes under the Code and regulations." (Internal Revenue Service [IRS])
[Guidance Overview] Text of IRS IR-2016-115: Retirement Plans Can Make Loans, Hardship Distributions to Louisiana Flood Victims (PDF)
"Participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures." (Internal Revenue Service [IRS])
[Guidance Overview] IRS Clarifies Treatment of Disregarded Single Member LLC Employees in 403(b) and 457(b) Plans of the Tax-Exempt Member of the LLC
"[GCM 201634021] provides the following clarifications: [1] A [single member limited liability company (SMLLC)] that does not elect to be taxed as a corporation is disregarded with respect to its member for purposes of the 403(b) and 457(b) eligible employer requirements. Therefore, if the SMLLC's member is an eligible employer, then the SMLLC is also an eligible employer for both 403(b) and 457(b) plans. [2] Employees of a SMLLC generally must be allowed to participate in a 403(b) plan sponsored by the member in order to avoid violating the 'universal availability' rule applicable to such a plan under Code Section 403(b)(12)(A)(ii). [3] Employees of a SMLLC may be allowed participate in a 457(b) plan sponsored by the member." (Bradley Arant Boult Cummings LLP)
[Guidance Overview] Proposed Regs on Deferred Compensation Plans Under Section 457
"The proposed Section 457 regulations' recognition that a non-compete agreement can create a substantial risk of forfeiture represents a significant departure from the Section 409A regulations, under which a covenant not to compete does not create a substantial risk of forfeiture for purposes of Section 409A." (Cheiron)
[Guidance Overview] Disregarded Entity Employees May Participate in Exempt Entity's Plans
"[GCM 201634021] clarified that employees of a single-member limited liability company (LLC) can participate in the section 403(b) and section 457(b) retirement plans of a single member that is a tax-exempt entity.... The IRS stated that a single-member LLC that has not elected to be taxed as an association is treated as a branch or division of the tax-exempt entity, not a subsidiary or affiliate. Therefore, the reference in the regulation to eligible employers does not apply to single-member LLCs that are disregarded." (RSM US)
[Guidance Overview] Section 457(f) Gets Its Groove Back
"[T]he proposed 457 regulations have resurrected rolling vesting, and also permit a covenant not to compete to create a substantial risk of forfeiture, subject in both instances to some tricky prerequisites. This added design flexibility for 457(f) plans is good news for non-profit organizations, which increasingly must compete for talent with for-profit organizations." (E is for ERISA)
[Guidance Overview] Section 457(f) Carve-Outs Under New Proposed Regs
"[T]he proposed regulations clarify how certain pay arrangements are carved out from Section 457(f) compliance, either because the arrangement is not deemed to provide for a deferral of compensation, or because it defers compensation but not in a manner that falls under Code Section 457(f). Where no deferral of compensation occurs, the pay arrangement is also exempt from the 'Enron rules' applicable to for-profit deferred compensation plans under Code Section 409A, and related regulations." (E is for ERISA)
[Guidance Overview] IRS Guidance on Section 457: What Non-Profit and Governmental Employers Need to Know, Part 1
"Under the proposed rules, compensation is not 'deferred' if the compensation must be paid and actually is paid within 2-1/2 months following the end of the calendar year ... in which the payment is no longer subject to a substantial risk of forfeiture.... For bonus plans, this means that as long as the bonus plan provides that the bonus must be paid by March 15th of the year following the year in which the employee earns the bonus and the bonus is actually paid on or before that March 15th, the plan will not be subject to Section 457(f). While this is good news, this can lead to unusual results if the bonus plan is not carefully designed." (Poyner Spruill LLP)
[Guidance Overview] Action Steps for Eligible Tax-Exempt and Governmental Employers Under the New Proposed Deferred Comp Requirements
"[T]he lack of guidance that existed prior to the issuance of the Proposed Regulations may have resulted in certain assumptions being made when deciding how to structure an agreement, plan, or program subject to the Deferred Compensation Requirements, and it may be appropriate to revise those assumptions in light of the new guidance ... [T]he Proposed Regulations provide new planning opportunities ... that were not clearly available before the issuance of the Proposed Regulations[.]" (Bond, Schoeneck & King)
[Guidance Overview] The Proposed 457(f) and 409A Regs: A Closer Look
"One of the first clarifications provided in the proposed regulations is that the rules under 409A apply 'separately and in addition to the rules under 457.' Thus, both the 409A regulations and the 457 regulations would apply to 457(f) plans when finalized. So the regulatory environment for 457(f) plans remains complex, though important clarifications regarding the interaction between 457(f) and 409A was provided in the proposed 457 regulations." (Cammack Retirement Group)
[Guidance Overview] Proposed Regs Affect Tax-Exempt Employers' Deferred Comp Plans
"The regulations explain and clarify [1] what types of arrangements will not be treated as deferred compensation for purposes of Section 457(f); [2] how to calculate the amount of compensation that is taxed under Section 457(f); [3] key definitions; and [4] special rules that apply to deferrals of current compensation and extensions of risk of forfeiture[.]" (Nixon Peabody LLP)
[Guidance Overview] Newly Proposed Regs Under Section 457(f) Impact Deferred Compensation Arrangements of Tax-Exempt and Governmental Entities
"These requirements for noncompetition agreements may be difficult to satisfy in many cases, particularly in states where noncompetition agreements are largely unenforceable. Even so, the treatment under section 457(f) is more flexible than under section 409A ... The noncompetition provisions in the proposed regulations provide a significant plan design opportunity for employers to coordinate different aspects of sections 457(f) and 409A such that compensation may continue to be deferred after the end of employment." (Steptoe & Johnson LLP)
[Guidance Overview] Newly Issued 457(f) Proposed Regs Clarify Rules for Nonqualified Deferred Comp Provided by Non-Profit and Governmental Entities (PDF)
"Of note is the fact that the Proposed Regulations do not generally provide grandfathered status to current Section 457(f) plans. While there are special rules for delayed applicability of the regulations for collectively bargained plans and plans of governmental entities that would be required to be amended by legislative action, the current provisions regarding the applicability of Section 457(f) regulations would not just apply prospectively but would apply to plans and other arrangements (unless specifically exempt from Section 457(f)) adopted before the date the regulations are finalized". (Trucker Huss)
[Guidance Overview] Cautionary Observations on the Proposed 457 Regulations
"Practitioners in the for-profit arena currently believe they enjoy wide latitude in restructuring severance arrangements that are exempt from 409A. It would not appear that practitioners will have that same latitude for severance arrangements that are exempt from 457 ... The regulations restrict, but do not eliminate this flexibility by establishing requirements that must be satisfied for non-competes and rolling risks of forfeitures to create a substantial risk of forfeiture.... Finally, the proposed 457 regulations raise the possibility that many leave programs, especially those maintained by governmental entities, could be suspect as deferred compensation arrangements." (Benefits Bryan Cave)
[Guidance Overview] Proposed Regs Create (Some) Executive Comp Design Opportunities for Tax-Exempt Employers
"Tax-exempt employers should also consider the design opportunities presented by the new proposed regulations. In particular, in appropriate cases, tax-exempt employers may find it useful to reconsider the application of rolling vesting or noncompete provisions in the case of deferred compensation arrangements for certain key executives where the facts and circumstances requirements support the application of those features." (Verrill Dana LLP)
[Guidance Overview] Highlights of the Proposed Regs Under Section 457(f)
"[T]he new regulations will apply to any pre-existing plans and arrangements that did not have the amounts deferred thereunder previously reported as taxable income. This could cause employees under pre-existing plans or arrangements to be subject to tax as of the effective date of the new regulations." (Squire Patton Boggs)
[Guidance Overview] Long-Awaited 457 Plan Regs Provide Planning Opportunities for Tax-Exempt and Governmental Employers
"[T]he 457 proposed regulations largely follow the concepts embedded in Section 409A and previously issued regulations under Section 409A. However, there are some unexpected differences ... In particular, the proposed regulations are of special interest to tax-exempt employers whose plans utilize non-compete restrictions or 'rolling risks of forfeiture,' or who would like to add those features." (Davis Wright Tremaine LLP)
[Guidance Overview] Proposed 457 Regs: Bona Fide Severance Pay Plan and Substantial Risk of Forfeiture
"The Proposed Regulations do not limit annualized compensation to the amount that may be taken into account under Code section 401(a)(17). Also, the Proposed Regulations do not include exceptions for collectively bargained separation pay plans, foreign separation pay plans, and reimbursements and certain other separation payments." (Caplin & Drysdale)
[Guidance Overview] IRS Proposes Regs for Deferred Compensation Plans of Tax-Exempt and Governmental Employers
10 pages. "The proposed regulations do not 'grandfather' existing arrangements or offer a transition period to conform to the proposed or final regulations. Thus, while new arrangements generally should be designed with an eye to compliance with the proposed rules, decisions about existing arrangements will be more complex." (Ropes & Gray LLP)
[Guidance Overview] Section 457 Proposed Regs: Bona Fide Severance Pay, Death Benefit, Disability, and Paid Time Off Plans
"The definition of a 'bona fide severance pay plan' under the proposed regulations differs from the definition of a 'separation pay plan' under Section 409A.... Because benefits offered by tax-exempt employers are subject to Section 409A and Section 457 unless an exemption applies, tax-exempt employers may wish to design their severance programs to meet the requirements of the bona fide severance pay plan exemption, the separation pay plan exemption, and/or the 'short-term deferral' exemptions under Section 409A and the proposed regulations." (Drinker Biddle)
[Guidance Overview] IRS Proposes Regulations on 457(f) Plans for Tax-Exempt Employers
"The proposed regulations provide rules for how the amount that is subject to tax under Section 457(f) is to be determined. If the deferred amount may be paid or available at different times or in different forms under the plan, the amount is treated as payable at the time and form where the present value is highest. However, if payment has commenced, or a time and form of payment have been elected and cannot be changed without both party's consent, the time and form of payment as commenced or elected is utilized." (Seyfarth Shaw LLP)
[Guidance Overview] Long-Awaited Proposed Rules Provide Greater Clarity for Executive Compensation Plans of Exempt Organizations (PDF)
"As anticipated, these rules mirror many of the rules under Code section 409A with respect to severance and substantial risk of forfeiture. In addition, the proposed regulations update the 2003 final regulations under Code section 457 for other statutory changes in the law affecting plans subject to Code section 457." (Groom Law Group, via Bloomberg BNA Pension & Benefits Daily)
[Guidance Overview] IRS Issues Proposed Regs Under Code Sec. 457
"[T]hese rules: [1] [recognize] a termination by an employee for 'good reason' as an involuntary severance from employment; ... [2] recognize required compliance with a noncompetition agreement as a substantial risk of forfeiture; ... [3] permit, in certain situations, elective deferral of current compensation and a rollover of existing substantial risk of forfeiture; [4] define bona fide severance pay plans that are exempt from Code Section 457 ... [5] define bona fide sick pay and vacation plans that are exempt from Code Section 457[.]" (Proskauer Rose LLP)
[Guidance Overview] IRS Proposes New 457 Regs for Nonqualified Deferred Compensation Plans of Tax-Exempt and Governmental Employers
"IRS Notice 2007-62 had signaled the IRS's intent to impose restrictive rules for what constitutes a 'substantial risk of forfeiture' under section 457(f), consistent with the rules under Code section 409A. However, the proposed regulations defining a section 457(f) substantial risk of forfeiture are more flexible and accommodating for designing deferred compensation arrangements than had been described in the Notice." (Faegre Baker Daniels LLP)
[Guidance Overview] IRS Issues Proposed Regs for Deferred Compensation Arrangements Sponsored by Tax-Exempt Organizations
"The regulations ... [1] permit the elective deferral of current compensation, which the IRS had previously said was not permitted under Code Section 457(f), provided that the elective deferral arrangement meets certain requirements ... [2] define for the first time what constitutes a bona fide severance pay plan that is not subject to Code Section 457; [3] describe for the first time what constitutes a bona fide sick and vacation leave program and, in particular, call into question programs that provide for large payouts of accrued sick and vacation leave upon termination of employment[.]" (Morgan Lewis)
[Guidance Overview] Worth the Wait: 457(f) Proposed Regs for Deferred Compensation of Tax-Exempt Organizations
"The proposed regulations provide that if structured appropriately: [1] 'Short-term deferrals' are not subject to Section 457(f). [2] Covenants not to compete may be used to create a substantial risk of forfeiture. [3] A rolling risk of forfeiture feature may be used to extend a substantial risk of forfeiture. [4] A substantial risk of forfeiture may be applied to current compensation (i.e., elective deferrals)." (Drinker Biddle)
[Guidance Overview] Proposed IRS Regs Under Sec. 457(f) Impact Compensation Arrangements of Governmental and Tax-Exempt Entities
"[T]he proposed regulations include new rules for determining: [1] What constitutes a deferral of compensation and a substantial risk of forfeiture under Section 457; [2] Plans that are not subject to the deferred compensation rules of Section 457; and [3] When amounts deferred are includible in income and how such amounts are to be determined.... [T]he proposed regulations provide for a definition of 'substantial risk of forfeiture' that generally follows the definition under ... Section 409A but contains different rules relating to noncompetition covenants and 'rolling' risks of forfeiture." (Skadden, Arps, Slate, Meagher & Flom LLP)
[Guidance Overview] Proposed IRS Regs Address Deferred Compensation and Severance Arrangements of Tax Exempt Organizations
"Among a number of other topics addressed in the proposed regulations, the IRS has set forth the requirements that must be satisfied in order to prevent severance pay and vacation or sick pay, offered by a tax-exempt organization, from being treated as deferred compensation that is taxable upon vesting." (Blank Rome LLP)
[Guidance Overview] Proposed Regs on Deferred Compensation Released
"Additional regulatory guidance was needed under section 457 to incorporate certain statutory changes and required amendments to existing regulations. Accordingly, the proposed regulations incorporate changes with respect to designated Roth contributions, certain public safety officers and qualified military service." (RSM US)
[Guidance Overview] Flexibility Offered for Deferred Compensation Plans of Tax-Exempt Organizations, Government Agencies
"Highlights of the new proposed regulations include ... 'Rolling' vesting is still permitted, subject to certain conditions.... Section 457(b) plans maintained by state and local government entities may include Roth contribution features.... Guidance is provided in defining bona fide vacation and sick leave plans, which are exempt from the Section 457(f) deferred compensation rules." (Ballard Spahr LLP)
[Guidance Overview] IRS Proposes Rules Under Section 457 for Deferred Compensation Arrangements Maintained by Tax Exempt Organizations
"The proposed regulations issued on June 21, 2016: [1] Include amendments to the 2003 final regulations to reflect subsequent statutory changes made to Section 457 ... [2] Provide guidance on certain issues under Sections 457(e)(11) and 457(e)(12) (relating to exemptions from Section 457) that are not addressed in the 2003 final regulations. [3] Provide additional guidance for ineligible plans under Section 457(f)." (Practical Law Company)
[Official Guidance] Text of IRS Proposed Regs: Deferred Compensation Plans of State and Local Governments and Tax-Exempt Entities
84 pages. "This document contains proposed regulations prescribing rules under section 457 of the Internal Revenue Code for the taxation of compensation deferred under plans established and maintained by State or local governments or other tax exempt organizations. These proposed regulations include rules for determining when amounts deferred under these plans are includible in income, the amounts that are includible in income, and the types of plans that are not subject to these rules.... This document also provides a notice of a public hearing on the proposed regulations." (Internal Revenue Service [IRS])
457(b) Plan Fees and Revenue Sharing
"[It] is surprising that so many public agencies have little or no idea how much is being 'taken' from their plans as custodian/trustee, recordkeeping, third-party administration, fund management, and investment advisory fees. To compound the confusion, many 457(b) plans are provided through 'bundled' arrangements ... Such arrangements make it difficult to determine exactly how much the plan and its participants are paying for each of the services being provided." (Chang Ruthenberg & Long PC)
New EPCU Project: Non-Governmental 457(b) Plans Excess Deferrals Project
"Why did I receive an EPCU compliance check letter? [Answer:] Our records show that you maintain a non-governmental 457(b) plan and you filed a Form W-2 for 2013 showing contributions to the plan exceeding $17,500 for any participant.... Our project goals are to verify that the plans comply with contribution limits and to recommend possible ways to remove any barriers to compliance. We'll correspond with plan sponsors to solicit information about their plan contributions. We'll focus on the following items: verify that the deferrals reported on Forms W-2 are accurate and determine if catch-up contribution calculations are compliant. In instances where a plan is not established or operated in accordance with IRC Section 457(b), we will inform the sponsor of our conclusions and actions that may need to be taken as a result." (Internal Revenue Service [IRS])
Have You Checked Your Retirement Plan Fees Lately?
"Recordkeeping and investment advice fees often are structured to yield a targeted amount of revenue -- an amount that may be grossly inappropriate if the plan's assets increase dramatically.... If you recognize that the recordkeeper's job is largely an accounting function, the fee for keeping track of participants' accounts should remain the same no matter how large the account grows.... A large number of public agencies maintain multiple 457(b) plans.... A single larger plan has more purchasing power." (Chang Ruthenberg & Long PC)
The Intersection of Sections 457(f) and 409A: Is Guidance Really Imminent? (PDF)
"At this point, it is not yet clear what the nature of any transition relief under the proposed regulations will be. While informally the Service has indicated there will be some such relief, it is not anticipated that it will either provide a general grandfather for existing arrangements or cover some of the more aggressive designs under Code section 457 that have been known to be used in the past." (Groom Law Group)
Nonqualified Deferred Compensation Plan Guidance from the IRS Appears to Be on the Horizon
"In a notice published in 2007, the IRS announced its intent to issue new regulations under Code Section 457(f) in an attempt to harmonize Code Sections 457(f) and 409A. Over eight years later, we are still waiting for that guidance. The wait may soon be over, however, because IRS officials informally have indicated that this guidance is 'very, very close' to be released, probably by the end of this year or early in 2016. The two pieces of guidance presumably will not be issued at the same time." (Porter Wright Morris & Arthur LLP)
[Guidance Overview] Employee or Independent Contractor: Why It Matters for Retirement Plans
"[T]he correction of employment misclassification issues by the IRS/DOL has historically led to newly classified employees making claims for retroactive benefits under employee benefit plans. For many types of retirement plans, such as 401(k) plans, the inclusion of proper plan language that would exclude independent contractors, even if they are later determined to be employees of the company, has often served as a valid defense to such claims. However, 403(b) plans are unique as to who can be excluded from the plan from an elective deferral standpoint. And 457(b) plans, though they can include independent contractors, have some unique issues of their own." (Cammack Retirement Group)
Delivering Investment Advice: Key Differences between 403(b) and 401(k) Plans
"Whether or not the provision of asset allocation models will be considered 'advice' for ERISA plans is one of the 'sticky' issues which is going to be resolved in the final version of the [DOL] fiduciary rule. But asset allocation models raise a whole different set of issues for the 403(b) investment adviser, whether it be an ERISA or a non-ERISA plan ... because investments in 403(b) plans do not enjoy the same exemptions from securities laws, as do 401(k) plan investments." (National Tax-Deferred Savings Association [NTSA])
Selecting Service-Providers: How Plan Sponsors Can Prepare and Process RFPs (PDF)
"The focus of this paper is to provide an outline of best practices a Plan Sponsor can utilize to undertake a Request for Proposal (RFP) process for 457(b), 401(a), 403(b), grandfathered 401(k), or any combination thereof. The information outlined in this document will apply to Plan Sponsors of all sizes; from the smaller end of the market (sub-$20M in plan assets) to jumbo with assets in excess of $1 billion." (National Association of Government Defined Contribution Administrators [NAGDCA])
EPCU Project: Non-Governmental 457(b) Plans
"Our project goals are to: [1] learn more about the operation of non-governmental 457(b) plans, [2] verify that the plans comply with the Internal Revenue Code requirements, [3] identify issues of noncompliance, and [4] recommend ways to remove any barriers to compliance. We'll correspond with plan sponsors to solicit information about the characteristics and features of their plans, including contributions and employer and employee eligibility." (Internal Revenue Service [IRS])
Best Practices for 403(b) and Related Retirement Plans Information Sharing: Minimum and Comprehensive Data Elements (PDF)
60 pages. Version 1.04; updated July 31, 2015. "These 'Best Practices' set forth: [1] The data elements for information sharing between 403(b) plan employers or employer representatives and vendors.... [2] A basic file convention layout. [3] The frequency of data transmissions. [4] An approach for sharing and transmitting data on a transaction or daily basis when agreed upon by both the sending and receiving parties... The Best Practices were developed for purposes of facilitating compliance with the final regulations by identifying the specific data elements necessary to coordinate plan administration." (The SPARK Institute)
[Guidance Overview] How the EPCRS Changes Might Impact 403(b) and 457(b) Plans
"EPCRS applies to 403(b) plans in a similar fashion as it does to qualified plans, with some variations.... [T]echnically EPCRS does not apply to 457(b) plans at all.... [T]he last revision of EPCRS prior to the current update opened the door to governmental 457(b) plan submissions to the IRS outside of the EPCRS program. These applied on a provisional basis, utilizing standards that are similar to those of the EPCRS. The door to private tax-exempt 457(b) plans, meanwhile, remains closed, and no such submissions are permitted at all." (Cammack Retirement Group)
457 Plans: Know Before You Go
"[Internal Revenue Code section] 457 plans are for state- and local-government workers, as well as certain executive employees of nonprofit organizations.... Among the big positives of 457 plans is that withdrawals are more flexible than is the case for withdrawals from 401(k)s or 403(b)s.... Contributors to 457 plans may also have a bit more latitude in when they can make catch-up contributions ... [W]orkers may also have the opportunity to contribute to a 457(b) plan in addition to -- rather than instead of -- their 403(b) plans ... Among the chief drawbacks is that matching contributions are rare.... It's also important to note the distinction between government and nongovernment 457 plans from the standpoint of creditor protections." (Morningstar)

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