Investor Glossary-457 planInvestor Glossary-457 planInvestor Glossary-457 planInvestor Glossary-457 planInsightful stock market charts - Click here
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

457 Plan

The HTML to link to this page

Similar to a 401K and a 403B plan and based on section 457 of the Tax Code, a 457 plan is a non-qualified tax-deferred compensation program for governmental employees and employees of non-church controlled tax-exempt organizations. Only eligible employers can establish a 457 plan. There are two types of 457 plans. The 457(b) plan, detailed under under IRC 457(b), is an eligible 457 plan. Under this type of 457 plan, employees can defer compensation on a pre-tax basis though payroll deduction. On the other hand, the 457(f) plan, detailed under under IRC 457(f), is an ineligible 457 plan and is subject to different tax treatment. Through an eligible 457 plan (i.e. 457(b) plan), holders defer federal and sometimes state taxes until the assets are withdrawn. An eligible 457 plan includes limits on the amounts deferred. In contrast an ineligible 457 plan (i.e. 457 (f) plan) has no contribution limits. Annual limits for 457(b) plans are set forth in IRC 402(g). For 2009 and 2010, the limit was set at $16,500. With an eligible 457 plan, distributions are made only when the employee reaches the calendar year of age 70 1/2, is severed from employment, or has a great financial need due to an unforeseeable emergency. Participants in an eligible 457 plan may rollover distributions into an Individual Retirement Account. In addition, eligible 457 plan holders may rollover a 457 plan to another 457 plan without incurring income tax on the amount rolled over.

Rate this 457 Plan definition...

Learn about investing with the Investor Glossary Term of the Day

Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.

Popular Terms: liquidity ratio, annual return, wholly-owned subsidiary, debt service coverage, margin rate, 1031 exchange, covered put, inflation, EBITDA, irrevocable trust, deferred tax, open position, 1035 exchange, ex-dividend date, stock split, labor relations, cancelled check, required rate of return, stock market close, limit order, real GDP, APR, in escrow, quality assurance, FTSE, LIBOR, per diem, FICO score, current ratio, Zero Cost Collar, average price per share, class C shares, deferred revenue, VIX, retained earnings, implied volatility, ex-dividend, dividends payable, option premium, balance sheet, command economy, minority interest, Key Rate Duration, diluted share, phantom income, risk management, 144a, reverse mortgage, 401a

Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use