This requirement was based upon the unique status of IRC Section 457 deferred compensation plan assets, which legally remained the assets of the employer subject only to the claims of general creditors.
32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, rescinds the previous requirement that employers report the assets of IRC Section 457 deferred compensation plans on their balance sheet, unless they are acting as a fiduciary for those assets.
According to the proposal, if a section 457 deferred compensation plan
met current requirements for inclusion in a government's fiduciary funds, it would be reported as an expendable trust fund in that government's financial statements.
Amounts deferred under a new Code Section 457 deferred compensation plan for government employees must be held in trust.
For all Code Section 457 deferred compensation plans maintained for government employees, a trust is required.
An association also may not move Section 457 deferred compensation plan
assets into a 401(k) plan.
Concerns arose, however, that governments' failure to report IRC Section 457 deferred compensation plan assets on their balance sheet could be interpreted by the Internal Revenue Service as a de facto admission that plan assets were not, in fact, assets of the government, thus disqualifying the plans.
31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, to IRC Section 457 deferred compensation plan assets held in a fiduciary capacity.
ICMA-RC's principal lines of business are Section 457 deferred compensation plans
and Section 401 defined contribution plans as well as Vantagepoint IRAs.
The project will cover all state and local government entities except defined benefit pension plans and Internal Revenue Code section 457 deferred compensation plans