457

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457

A retirement investment plan for employees of state and municipal governments in which a contributor defers taxation on contributions until after withdrawal. A worker places a portion of his/her pre-tax income into a 457 account and allows it to be invested. Taxation is deferred until withdrawal from the account, generally after retirement. 457s are employee benefits, and workers must have a sponsoring employer, such as a public school or a church, in order to take advantage of one. It is equivalent to a 401(k) and a 403(b); the main structural difference is that 457s may allow for higher catch-up contributions.

457.

These tax-deferred retirement savings plans are available to state and municipal employees.

Like 401(k) and 403(b) plans, the money you contribute and any earnings that accumulate in your name are not taxed until you withdraw the money, usually after retirement. The contribution levels are also the same, though 457s may allow larger catch-up contributions.

You also have the right to roll your plan assets over into another employer's plan, including a 401(k) or 403(b), or an individual retirement account (IRA) when you leave your job.

References in periodicals archive ?
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.
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.
For all Code Section 457 deferred compensation plans maintained for government employees, a trust is required.
Amounts deferred under a new Code Section 457 deferred compensation plan for government employees must be held in trust.
The project will cover all state and local government entities except defined benefit pension plans and Internal Revenue Code section 457 deferred compensation plans.
ICMA-RC's principal lines of business are Section 457 deferred compensation plans and Section 401 defined contribution plans as well as Vantagepoint IRAs.
Recently, the Governmental Accounting Standards Board (GASB) has proposed guidance on Internal Revenue Code (IRC) Section 457 deferred compensation plans, property tax revenue recognition criteria, and custodial credit risk classifications involving bank holding companies.
Until the mid-1980s, most governments did not report assets associated with IRC Section 457 deferred compensation plans in their financial statements.