tailieunhanh - Lecture Employee benefits and retirement planning - Chapter 27: Section 457 plans

This chapter discusses Section 457 plans. After identifying these, normally government-related, nonqualified deferred compensation plans, the chapter moves into the area of design features. The design features section covers what employers are covered by Section 457, limits on amount deferred, timing of salary reduction elections. distribution requirements, coverage and eligibility, and funding. | What is it? A plan designed to comply with IRS Code Section 457, which provides rules for all nonqualified deferred compensation plans of - governmental units - governmental agencies - non-church controlled tax exempt organizations Copyright 2009, The National Underwriter Company When is it indicated? When - governmental units - governmental agencies - non-church controlled tax exempt organizations want employees to have a deferred compensation plan Copyright 2009, The National Underwriter Company Design Features: What employers are covered by Section 457? 1. a state, a political subdivision of a state, and any agency or instrumentality of a state or political subdivision of a state 2. any organization exempt from federal income tax, except for a church or synagogue or an organization controlled by a church or synagogue Copyright 2009, The National Underwriter Company Design Features: Limit on Amount Deferred Eligible Section 457 plans plans include limits on the amounts deferred typically cover broad class of employees eligible for favorable tax treatment Copyright 2009, The National Underwriter Company Design Features: Limit on Amount Deferred Ineligible Section 457 plans plans provide greater deferral levels than annual dollar limit generally designed for executives taxed in first year in which no longer ‘substantial risk of forfeiture’ generally taxable in full no later than the year of the executive’s retirement Copyright 2009, The National Underwriter Company Basic limit for eligible plan, amount deferred annually by participant cannot exceed 100% compensation Or applicable dollar amount: 2006 $15,000 2007 $15,500 2008 $15,500 2009 $16,500 Copyright 2009, The National Underwriter Company Design Features: Limit on Amount Deferred Section 457 plans allow ‘double dipping’ salary reduction contributions do not reduce contributions to any other type of salary reduction plans, . Section 403(b) or Section 401(k) plans 100% of compensation | What is it? A plan designed to comply with IRS Code Section 457, which provides rules for all nonqualified deferred compensation plans of - governmental units - governmental agencies - non-church controlled tax exempt organizations Copyright 2009, The National Underwriter Company When is it indicated? When - governmental units - governmental agencies - non-church controlled tax exempt organizations want employees to have a deferred compensation plan Copyright 2009, The National Underwriter Company Design Features: What employers are covered by Section 457? 1. a state, a political subdivision of a state, and any agency or instrumentality of a state or political subdivision of a state 2. any organization exempt from federal income tax, except for a church or synagogue or an organization controlled by a church or synagogue Copyright 2009, The National Underwriter Company Design Features: Limit on Amount Deferred Eligible Section 457 plans plans include limits on the amounts .