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All News > 457 Plans

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End of the Year Amendment Requirement for 457(b) Plans of Tax-Exempt Organizations
Boutwell Fay LLP Link to more items from this source
[Guidance Overview]
Dec. 1, 2022

"The only provision of the Acts that requires an amendment to a 457(b) plan is the change in the required minimum distribution rules (RMDs) enacted under the SECURE Act. The SECURE Act changed the date that RMDs are required to begin for most employees who were born on or after July 1, 1949, from 70½ to 72. The SECURE Act also made significant changes in the requirements for distributions to beneficiaries."

Tags: 457 Plans  •  Retirement Plan Amendments

Year End SECURE Act Deadline Looms for Tax-Exempt 457(b) Plans
E is for ERISA Link to more items from this source
[Guidance Overview]
Nov. 2, 2022

"Despite an extension granted to qualified plans, Section 403(b) plans, and governmental Section 457(b) plans to make necessary amendments under the SECURE Act, no extension past December 31, 2022 currently applies for Section 457(b) plans maintained by private tax-exempt organizations.... [A]bsent future guidance from IRS, these plans must be amended by the end of this year to incorporate the SECURE Act's changes to required minimum distribution provisions."

Tags: 457 Plans  •  Retirement Plan Amendments  •  SECURE Act

Amending a Governmental Employer's 457(b) Plan for SECURE and CARES
VOYA Financial Link to more items from this source
Sept. 30, 2022

"Best practices: [1] Assess state/local law to conform to SECURE and CARES provisions. [2] Coordinate with your plan document provider on required and optional plan design features. [3] Authorize an individual to be responsible for timely adopting plan amendments to the 457(b) plan and ensure that the plan amendment is timely signed. [4] Maintain the plan document, including amendments, in a secure location."

Tags: 457 Plans

What's My Limit? Contributions to Both a 403(b) and a Governmental 457(b) Plan
Retirement Learning Center, LLC Link to more items from this source
[Guidance Overview]
Sept. 26, 2022

"Since 2002, contributions to 457(b) plans no longer reduce the amount of deferrals to other salary deferral plans, such as 401(k) or 403(b) plans. A participant's 457(b) contributions need only be combined with contributions to other 457(b) plans when applying the annual contribution limit.... Consequently, an individual who participates in both a governmental 457(b) plan and one or more other deferral-type plans, such as a 403(b), 401(k), salary reduction simplified employee pension plan, or savings incentive match plan for employees has two separate annual deferral limits."

Tags: 403(b) Plans and Annuities  •  457 Plans

Text of IRS Notice 2022-33: Extension of Retirement Plan Amendment Deadlines (PDF)
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
Aug. 3, 2022

"Notice 2022-33 extends the deadlines for amending a retirement plan or individual retirement arrangement to reflect certain provisions of Division O of the [SECURE Act], and ... the Bipartisan American Miners Act of 2019 (Miners Act), by modifying Notice 2020-68 ... and Notice 2020-86... In addition, this notice extends the deadline for amending a retirement plan to reflect the provisions of section 2203 of the [CARES Act].

"[T]he extended amendment deadline for [1] a qualified retirement plan or section 403(b) plan (including an applicable collectively bargained plan) that is not a governmental plan or [2] an IRA is December 31, 2025. Later deadlines apply with respect to governmental retirement plans (including governmental plans under section 457(b) of the Internal Revenue Code)."

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  457 Plans  •  CARES Act  •  Retirement Plan Amendments  •  SECURE Act

Editor's Pick FICA Tax Withholding and Reporting for Section 457(b) and 457(f) Nonqualified Deferred Compensation Plans
Trucker Huss Link to more items from this source
[Guidance Overview]
Aug. 1, 2022

"[This article] provides a brief summary of the timing rules for income tax withholding applicable to 457(b) and 457(f) plans. Next, it reviews the special timing rule and exceptions for FICA tax withholding for nonqualified deferred compensation plans. Finally, it provides ideas and strategies for properly setting up and administering FICA tax withholding and reporting."

Tags: 457 Plans

Equitable Settles with SEC for $50 Million Over Allegedly Misleading Fee Statements
American Retirement Association [ARA] Link to more items from this source
July 25, 2022

"Equitable agreed to pay $50 million for providing account statements to about 1.4 million variable annuity investors that included [what the SEC called] 'materially misleading statements and omissions' concerning investor fees. Most of the investors who received the account statements are teachers or other employees of public-school districts who invested in Equitable's proprietary 'EQUI-VEST' variable annuities within a 403(b) or 457(b) defined contribution plan."

Tags: 403(b) Plans and Annuities  •  457 Plans  •  Retirement Plan Investments

Contributions Under an Eligible 457(b) Plan
Voya Link to more items from this source
July 13, 2022

"Employee contributions and vested employer contributions (along with applicable earnings on those vested employer contributions), count toward the General 457 Annual Contribution Limit in effect in the taxable year that contributions are vested. This requirement can result in excess contributions in the year vested and can be administratively cumbersome.... An eligible participant seeking to contribute under the Special 457 Catch-up must make a written election ... Determining under contributed amounts in prior years requires a year-by-year analysis."

Tags: 457 Plans  •  Retirement Plan Administration

Governmental Employers: Multiple Plans May Result in Excessive Participant Loans
Best Best & Krieger LLP Link to more items from this source
June 10, 2022

"[B]ecause in many 'multiple plan -- multiple vendor' situations there is no one monitoring or policing these limits across all of the plans, the per participant loan limits often are violated."

Tags: 401(k) Plans  •  457 Plans  •  State and Local Government Plans

457(b) Deferred Compensation Plans: Fiduciary Duties and How to Mitigate Potential Risks
McDermott Will & Emery Link to more items from this source
[Guidance Overview]
May 20, 2022

32 presentation slides. Topics include: [1] Who is a Fiduciary? [2] Fiduciary functions & duties; [3] Fiduciary breach lawsuits; [4] Limiting liability; [5] Illustrative examples; [6] Proprietary funds; [7] Index funds; [8] Hypothetical illustration.

Tags: 457 Plans  •  Fiduciary Duties

401(k), 403(b), 457(b): Why Are the Rules Different?
Belfint Lyons Shuman Link to more items from this source
Apr. 8, 2022

"Like Neapolitan ice cream, 401(k), 403(b), and 457(b) are just three flavors of the same product. [A] chart summarizes some of the main differences between the three."

Tags: 401(k) Plans  •  403(b) Plans and Annuities  •  457 Plans  •  Retirement Plan Design

The Proper Timing of 457(b) Deferral Elections
Best Best & Krieger LLP Link to more items from this source
[Guidance Overview]
Apr. 5, 2022

"[T]he deferral rules for governmental 457(b) plans generally require an election to defer (or a change in an existing election) to be made during the calendar month prior to the calendar month in which the subject income would be paid. Although there is an exception for a newly hired employee who is becoming eligible for the plan for the first time -- which allows an election to be made in the first month of employment when the employee is being paid -- that initial election must be made on or before the employee's first day of work."

Tags: 457 Plans  •  State and Local Government Plans

How Teachers Should Ensure a Successful Retirement
403bwise Link to more items from this source
Feb. 15, 2022

"[1] Understand how your pension works ... [2] Find out if you contribute to Social Security ... [3] Invest in a 403(b) and/or 457(b) ... [4] Understand the basics of investing ... [5] Continue to educate yourself."

Tags: 403(b) Plans and Annuities  •  457 Plans  •  Retirement Plan Information for Employees

Illinois Teachers' Retirement System Supplemental Savings Plan Update
Franczek P.C. Link to more items from this source
[Guidance Overview]
Jan. 4, 2022

"On January 10, 2022, teachers will be able to begin submitting applications to the Illinois Teachers' Retirement System (TRS) to participate in TRS's new Supplemental Savings Plan which is a tax-deferred compensation program under Section 457(b) of the United States Internal Revenue Code. Payroll deductions for participants are expected to start in March, 2022."

Tags: 457 Plans  •  Local Regulation  •  State and Local Government Plans

What to Expect for Retirement Savings Plans in 2022
Employee Benefits Report Link to more items from this source
Jan. 3, 2022

"For 2022, the IRS increased the amount employees can contribute to 401(k) and 403(b) plans, to most 457 plans, and to the federal government's Thrift Saving's Plan to $20,500.... The full retirement age for those born in 1960 or later is now 67.... The maximum annual earnings that are subject to Social Security withholding in 2022 are $147,000 per employee.... Last year to report coronavirus-related distributions."

Tags: 401(k) Plans  •  457 Plans  •  Retirement Plan Administration  •  Retirement Plan Design

How Governmental 457(b) Plans Differ from Top Hat 457(b) Plans
Slott Report Link to more items from this source
[Guidance Overview]
Dec. 1, 2021

"Governmental 457(b) plan funds must be held apart from the employer's assets in a trust fund. By contrast, top hat plan funds must remain property of the employer. So, even though top hat assets can't be reached by the employee's creditors, they can be reached by the employer's creditors at all times. This makes top hat plans riskier than governmental plans. That level of risk is why Congress limited eligibility to highly-paid employees who can better bear that risk."

Tags: 457 Plans  •  State and Local Government Plans

'Disregarded Entities,' 403(b)s and 457(b)s
Retirement Learning Center, LLC Link to more items from this source
[Guidance Overview]
Nov. 3, 2021

"In most cases, if a 403(b) sponsor has a subsidiary or other affiliate; it, too, must be an eligible employer, on its own, in order to allow its employees to participate in the 403(b) plan. There is an exception for certain disregarded entities. Employees of a disregarded entity are treated as employees of the entity sponsoring the 403(b), and must be allowed to make elective deferrals in order to satisfy the universal availability rule."

Tags: 403(b) Plans and Annuities  •  457 Plans

What Happens to Participants' 457(b) Deferral Elections When They Pass Away?
Best Best & Krieger LLP Link to more items from this source
Oct. 28, 2021

"[Most] forms and documents ... do not address whether a deferral election is revoked upon the participant's death ... [T]here does not appear to be any case law addressing whether the employee's death automatically revokes plan election.... [W]hat are your choices?"

Tags: 457 Plans

IRS Issue Snapshot: Section 457(b) Eligible Deferred Compensation Plan -- Written Plan Requirement
Internal Revenue Service [IRS] Link to more items from this source
[Guidance Overview]
Aug. 18, 2021

"The Examination Agent is required to review plan documents to ensure it was adopted timely and is in compliance with the regulations.... The plan document should be reviewed for subsequent law changes ... A plan document failure may cause an operational failure."

Tags: 457 Plans  •  Retirement Plan Administration

Take a Closer Look at Your 401(a) and 457(b) Plans When You Change Providers
Best Best & Krieger LLP Link to more items from this source
Aug. 5, 2021

"It's a mistake to assume that the migration from one recordkeeper to another would necessarily build-in a thorough document compliance review. In practice, this seldom happens. However, the required adoption of a 'new' plan document provided by the new recordkeeper provides you with a perfect opportunity to stop and check whether the terms, features, and operation of your plan are appropriate, compliant and current."

Tags: 457 Plans  •  Retirement Plan Design

Is Your 457(b) or 401(a) Plan Fee Allocation Fair and Reasonable?
Best Best & Krieger LLP Link to more items from this source
July 8, 2021

"If one accepts the characterization of day-to-day recordkeeping ... as primarily an accounting function ... why shouldn't these services be paid for on a per account (or per capita) basis? ... If your plan, like most plans, uses its independent investment advisor to choose, or help you choose, your investment line-up, don't these services benefit all participants equally? ... [If] your plan has 20% to 40% of the plan assets invested in the stable fund option, are the participants invested in this option paying a disproportionate share of the overall recordkeeping fees?"

Tags: 457 Plans  •  Retirement Plan Investment Costs  •  State and Local Government Plans

What Participant-Level Records Should Your California Governmental 401(a) or 457(b) Plan Keep?
Best Best & Krieger LLP Link to more items from this source
June 24, 2021

"Although governmental plans generally are not subject to ERISA, the inclusion of ERISA-like fiduciary duties and responsibilities in authorities such as the California Constitution, definitely make the guidance and rules promulgated by the [DOL] relevant to California's public sector plans. Based on the DOL's guidance, and plain common sense, here are a few suggestions regarding the retention of participant-level records:"

Tags: 457 Plans  •  Local Regulation  •  Retirement Plan Administration  •  State and Local Government Plans

Editor's Pick GASB 97 Has Been Released: What's New, What to Do, and What You Need to Know
Berry, Dunn, McNeil & Parker, LLC Link to more items from this source
[Guidance Overview]
May 13, 2021

"With the issuance of GASB 97, the board stated that it believes Section 457 plans could indeed be pensions. Therefore, Section 457 plans which fit the definition of a pension trigger the same reporting requirements of any other pension plan."

Tags: 457 Plans  •  State and Local Government Plans

457(b): Savings Plan Unicorn?
403bwise Link to more items from this source
[Opinion]
May 11, 2021

"There's a retirement plan available to teachers that sounds almost mythical. Upon separation of service it can be accessed tax-penalty free at any age. It has a provision that allows regular contributions to be doubled for three years prior to retirement (if the employer permits it).... The plan is called the 457(b)."

Tags: 457 Plans

Caution Advised in Appointing Authorized Plan Representatives for Governmental 457(b) or 401(a) Plans
Best Best & Krieger LLP Link to more items from this source
Apr. 29, 2021

"In many cases, this [Authorized Plan Representative Form (APRF)] appears, at least from the perspective of the recordkeeper, to give APRs ... who may be mid- or lower-level staff members, many of the duties and responsibilities that the sponsor thinks it has reserved to the named fiduciary[.]"

Tags: 457 Plans  •  Retirement Plan Administration  •  State and Local Government Plans

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