HIGHLIGHTS OF 457 PLANS

HIGHLIGHTS OF 457 PLANS

(Tax deductible contribution, tax deferred growth and taxable distribution)

	A 457 plan is a non-qualified deferred compensation plan for states, counties, cities, agencies, and their political subdivisions or agencies.
	501(3)(c) Organizations can have 457 Plans.
	The Plan is named after IRS code 457.
	A 457 Plan is a deferred compensation plan whose purpose is to provide a tax favored vehicle for participants to save for retirement.
	It is not a qualified retirement under Federal Law.
	Deferred compensation is a contractual agreement between an organization and an employee wherein the organization makes an unsecured promise to defer the compensation of the employee to some future date for services currently performed by the employee.
	Annual contributions are made through salary deduction up to $11,000 per year.
	Starting in 2002, catch up contribution provision available for individuals over 50 years of age.
	The employee does not have any direct claim on the assets.
	Distributions are made upon retirement, termination of employment, extreme financial hardship or at death to the name beneficiaries.
	Payments are taxable as ordinary income.
	Distributions can be rolled to an IRA under certain conditions.
	Effective as of 2002, flexibility regarding rollovers to other plans and IRAs.
	No Special tax methods can be used to calculate the IRS liability resulting from payments.

There is a limited catch-up provision which can be used for any or all of the last three years prior to normal retirement age. The catch-up is the lessor of $15,000 or an amount equal to the deferral limitation not used from prior taxable years in addition to the current deferral.

Always consult with a professional tax advisor to determine your potential tax consequences.

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