TAX 9873 Lecture Notes - Lecture 66: Deferred Compensation, Employee Retirement Income Security Act
Document Summary
457(b) tax exempt vs. state and local or 501 of f. 457(f) almost like nonqualified plan in a government type of setting. Section 457(b) eligible plans are the principal exception to section 457(f). The rules differ significantly between governmental and nongovernmental plans. Governmental plans must be funded by placing assets beyond the reach of the employer"s creditors, producing a unique hybrid that has the characteristics of both a qualified and a nonqualified plan. Nongovernmental plans are unfunded and, if the employer is subject to erisa, must be limited to a select group of management or highly compensated employees. 457(b) plans maintained by state, county, or local governments are funded plans. Assets must be set aside similar to 403(b) plans: 457(b) contributions (employer + employee) not subject to federal or most state income tax. Section 415 contribution limits doesn"t apply to public plans. If government, entity can still have qualified plans. They can have qualified and use these types of arrangement.
