457 Plans

Question 1

What type of employers can offer 457 plans

Answer 1

Government and non-profit

Question 2

T or F - 457 plans are called “Top Hat” plans because employers can only offer them to highly compensated employees

Answer 2

True

Question 3

What is the maximum annual employee deferral contribution to a 457 plan (2016)

1. For an employee under age 50
2. For an employee age 50 or older

Answer 3

1. $18,000

2. $24,000

Question 4

Which of the following is correct about 457 plan contributions?

A. They consist of contributions made only by employers.

B. They consist of employee salary deferrals only
C. They can be a mix of employer and employee contributions

Answer 4

B

Question 5

If an employee has both a 401k (or 403b), plus a 457 plan, what is the maximum they can defer through the two plans?

1. Employee is under age 50
2. Employee is age 50

Answer 5

401k/403b $18,000
457b $18,000
Total $36,000

401k/403b $24,000
457b $24,000
Total $48,000

Unlike other employer retirement plans, 457 plans aren’t subject to the overall limit on salary deferrals. This is why many government and non-profit employers offer both.

Question 6

Which of the following differentiates 457b plans from 401k and 403b plans?

1. Not subject to the rules coordinating maximum deferral amounts between plans
2. Allow participation by Independent Contractors
3. Do not impose a 10% penalty for distributions prior to age 55
4. Cannot be rolled into IRAs or other employer plans except for other 457b plans

Answer 6

All of the above are unique features of a 457b plan.