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A 457(f) Supplemental Executive Retirement Plan is a non-qualified deferred compensation plan that allows non-profit organizations and governmental entities to provide additional retirement income, exceeding annual IRS limits for 457(b) plan contributions to key, highly-compensated executives. In a recent webcast, Bob Architect, vice president, Compliance and Market Strategy, VALIC, listed new proposed 457(f) regulations among the items coming in 2012. Architect said the proposed regulations are going to address some of the issues that have perplexed those in the industry for years. For one, it should answer the question: Are salary reductions good for 457(f) plans. In addition, the guidance should address whether there will be permitted rolling risks of forfeiture. Architect explained that this means, if have assets are eligible for forfeiture after five years, then the sponsor can extend that period in cases where subsequent elections to defer occur before the lapse of the period in which assets are subject to risk of forfeiture. If the subsequent election to defer occurs after the lapse, then the sponsor can continue the risk of forfeiture period for prior assets. Architect said this may depend on whether amounts other than the participant’s deferral will be subject to that forfeiture. Architect added, the proposed regulations will address whether covenants of non-compete are subject to a substantial risk of forfeiture requirement.
A 457(f) Supplemental Executive Retirement Plan is a non-qualified deferred compensation plan that allows non-profit organizations and governmental entities to provide additional retirement income, exceeding annual IRS limits for 457(b) plan contributions to key, highly-compensated executives. In a recent webcast, Bob Architect, vice president, Compliance and Market Strategy, VALIC, listed new proposed 457(f) regulations among the items coming in 2012.
Architect said the proposed regulations are going to address some of the issues that have perplexed those in the industry for years. For one, it should answer the question: Are salary reductions good for 457(f) plans.
In addition, the guidance should address whether there will be permitted rolling risks of forfeiture. Architect explained that this means, if have assets are eligible for forfeiture after five years, then the sponsor can extend that period in cases where subsequent elections to defer occur before the lapse of the period in which assets are subject to risk of forfeiture. If the subsequent election to defer occurs after the lapse, then the sponsor can continue the risk of forfeiture period for prior assets. Architect said this may depend on whether amounts other than the participant’s deferral will be subject to that forfeiture.
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