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457(b) and 457(f) Deferred Compensation Plans

Implementing Full 457 Plan Services

Employee Benefits Law Group can help any exempt organization or governmental entity that is subject to special income tax rules under Code section 457.

We can help you tackle every aspect of a 457 plan while ensuring compliance.

We help clients design, document and implement deferred compensation plans that meet the organization's needs and goals. The laws and regulations surrounding these plans can be complex and challenging, so let us handle the difficult work and help you to ensure full compliance. Our expertise allows us to overcome and avoid common problems that may emerge during the life of a 457 plan, such as Code section 409A compliance for certain 457(f) plans, whether the plan is an ERISA "pension" plan and must be limited to the "top hat" group, reasonable compensation concerns and all employment tax aspects.

We'll help you determine what plans are available for either key management personnel or all employees, and work with you to implement the most effective one(s).

About 457 Plans

Code section 457 governs two types of deferred compensation plans:

  • 457(b) plans: These are "eligible" deferred compensation plans that are subject to statutory requirements regarding how much can be deferred under the plan and when the benefits are payable to the participants. The participants are taxed on the benefits as they are distributed to them.
  • 457(f) plans: These are "ineligible" deferred compensation plans that don't satisfy one or more of the statutory requirements applicable to 457(b) plans, often by exceeding the amount that may be deferred under the plan. The participants are taxed on the benefits as they become vested in those benefits (even though they are not distributed to them).

"We help clients design, document and maintain 457 plans — some times using both a 457(b) plan and a 457(f) plan in order to meet the organization's goals. However, before using either type of plan, we help clients explore the utilization of tax-qualified retirement plans because of the more favorable tax benefits to the participants."

– Ken Ruthenberg, Employee Benefits Law Group Shareholder