Agenda Packets - 1997/10/06 - Laserfiche WebLink

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ATTACHMENT A: OVERVIEW OF 457 LAW CHANGES Employer Action Issue Current Law New Law Reference Guide 4� Plan Level Trust 457 assets must remain solely All amounts deferred under a Employers with a 457 plan in existence the property of the employer, Section 457 plan must be on August 20, 1996 must establish a subject to the claims of the held in trust for the exclusive plan level trust prior to January 1, 1999. employer's general creditors. benefit of plan participants (However, until the trust is established, and/or beneficiaries. assets will remain unprotected.)The plan level trust may be established by • adopting the revised RC 457 plan document or by amending your own plan document with applicable language,such as language found in the RC plan document.See the • Implementation Checklist for more details. 457 Loans Because 457 plan assets are the As acknowledged in an Employers must decide whether sole property of the employer,a official Congressional report, offering loans would be desirable. If it 457 plan cannot include a loan once 457 plan assets are is decided that loans will be offered, a provision. held in a trust,a plan may plan level trust must first be established. permit loans under the A loan option is available in the revised provisions of section 72(p)of RC 457 plan document. Loans may be the Internal Revenue Code. elected by adopting the RC plan document and electing to offer loans or by amending your own plan document with applicable language,such as language from the RC plan document. See Implementation Checklist for more details. lknual Contribution The annual contribution The annual contribution Adopt revised RC 457 plan document um maximum is the lesser of(1) maximum of$7,500 will be or amend your own plan document $7,500 or(2)33 1/3 percent of indexed to increase in $500 with applicable annual contribution includible compensation. increments(rounded down) maximum language,such as language based on changes in the from the RC plan document.See Consumer Price Index.The Implementation Checklist for more first increase will likely not details. occur until 1998. 457 Postponement of Upon separation-from-service, Allows a one-time postpone- Adopt revised RC 457 plan document Beginning Payment the participant must irrevocably ment of beginning payment or amend your own plan document Date Election elect a beginning payment date date elections. For example, with applicable distribution date for plan distributions. a participant could postpone change language, such as language his/her original beginning from the RC plan document.See payment date election of Implementation Checklist for more March 31, 1997, to Septem- details. ber 30, 1998. 457 withdrawals are permitted Allows one-time employer- Adopt revised RC 457 plan document 457 Small-Balance under the following situations: or employee-initiated or amend your own plan document Account Distributions (1)separation from service distributions of 457 accounts • with applicable small-balance account (including retirement, termina- with balances of$3,500 or distribution language, such as language tion, or death)and(2)unfore- less that have been inactive from the RC plan document.See seeable emergency. (have not received contribu- Implementation Checklist for more tions)for at least two years. details. If a small-balance distribu- tion is taken from a plan,a participant can participate in • 1 • that plan again. However, this participant cannot receive another small- balance distribution from 3 the plan.