Certain defined contribution plans are only available to certain types of employers. State and local governmental employers, along with certain non-profits, can establish 457 plans. A 457 plan is a non-qualified, tax-advantaged plan established for your employees. Some rules applicable to 457 plans are similar to 401(k) plans, however other rules differ. It’s important to understand the terms of your 457 plan and how to best design it to meet your employees’ needs.
457 Plans with Watkins Ross
Although many employers in these sectors are familiar with 457 plans, many are not aware of how to leverage the plan to meet their employees’ goals. Similar to a 401(k) plan, you can elect to allow employees to defer money into a 457 plan on a pre-tax or after-tax basis; plus the employer can contribute to the plan. However, the plan limits applicable to the total contributions made are handled differently than a 401(k) plan. For example, both types of plans allow for catch up contributions, but 457 plans also feature a “Double Limit Catch-up” provision. This feature is designed to allow participants who are nearing retirement to compensate for years when they were eligible but didn’t contribute to the plan.
At Watkins Ross, we partner with you to clearly define your objectives and ensure you are setting up the ‘right’ retirement savings plan for your business. With the complex rules governing 457 plans, we clearly communicate the regulations so that you can focus on the success of your business. The Watkins Ross team consults on retirement plan designs, administration and consulting for 457 plans.