“Unfortunately, given the hospital’s current financial situation, under the plan documents, Saint Francis really had no choice other than to direct the plan trustee to cease paying benefits under the plan to any and all participants,” George Prisco, vice president of human resources (HR) at Saint Francis Hospital and Health Centers, told the Poughkeepsie Journal.
Participants have been notified by letter, and the letter encouraged them to stop paying into the plan. Prisco estimated less than 2% of the hospital’s 2,000 or so active employees are covered by the plan, according to the news report.
A 457 plan permits employees of a nonprofit organization to enable its highly compensated and select management employees to defer above 403(b) or 401(k) plan limits (see “Feature: 457 Plan Reflections”). It is considered a nonqualified plan and assets are not protected from the sponsor’s creditors.