Focus on...Section 457 Exemptions

Abstract:     
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) made substantial changes to the rules governing deferred compensation plans of governmental and tax-exempt employers under Code Section 457. In addition, on July 10, 2003, the IRS issued final regulations under Code Section 457, which provide broad guidance on eligible deferred compensation plans, and clear standards for their administration and operation. [See 'Final Guidance Issued on 457 Plans' by Amelia M. Klein, Journal of Pension Benefits, Winter 2004, Vol. 11, No. 2, p. 85.] This article discusses the plans of eligible Section 457 employers that are exempt from the requirements of Code Section 457. In this article, any reference to a "plan" or "457 plan" refers to a plan that satisfies the requirements for an eligible deferred compensation plan (IRC § 457(b)), unless the context indicates otherwise. (*Correction, the last 18 words of text are missing at the very end of the article on page 38. The last line should read in its entirety: 'Meanwhile, employers should proceed with caution and bear in mind that, as in many other areas of the tax law, a plan that seems too good to be true probably is.')

Number of Pages in PDF File: 7

Keywords: Code Section 457, deferred compensation plan, EGTRRA

Accepted Paper Series