457b

What is a 457(b)?

Section 457(b) of the Internal Revenue Code provides an exclusion from gross income for a certain portion of salary deferred by participants in the deferred compensation plans of state and local governments and certain tax-exempt organizations. The earnings on the deferrals inside these plans are also excluded from the participants’ current gross income.

 

Eligible Participants

Participation in a Section 457(b) plan is restricted to persons who perform services for an eligible employer, including:

-Part-time and seasonal employees

-Full-time employees

-Temporary employees

-Independent contractors

 

Maxium Deferral Amount

Deferral limit      Deferral Limit

Year     Under age 50     Age 50 and Over

2008    $15,500             $20,500

2009    $16,500             $22,000

2010    $16,500             $22,000

2011    $16,500             $22,000

 

Distribution

Distributions from a Section 457(b) plan may not be made earlier than:

-Calendar year in which the participant reaches normal retirement age

-Employee seperates from service

-Unforeseeable emergency (casulty loss and financial hardship)

 

The information above is for sole purpose of information only and is not intended or is in anyway a contract.

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