Benefits & ERISA Law

Governmental Roth 457 Plans May Become a Reality

By Suzanne Wynn

Earlier this year, I posted about a provision contained in one of the 13 appropriate bills which would permit 457(b) plans to include a qualified Roth contribution program.

H.R. 2419, also known as the Food and Energy Security Act of 2007, commonly known as the Farm Bill, contains Section 12512, which is “Participants in government section 457 plans allowed to treat elective deferrals as Roth contributions”. That section states:

(a) In General. Section 402A(e)(1) (defining applicable retirement plan) is amended by striking “and” at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting “, and”, and by adding at the end the following:

“(C) an eligible deferred compensation plan (as defined in section 457(b)) of an eligible employer described in section 457(e)(1)(A).”.

(b) Elective Deferrals. Section 402A(e)(2) (defining elective deferral) is amended to read as follows:

“(2) Elective Deferral. The term “elective deferral” means -

“(A) any elective deferral described in sub-paragraph (A) or (C) of section 402(g)(3), and

“(B) any elective deferral of compensation by an individual under an eligible deferred compensation plan (as defined in section 457(b)) of an eligible employer described in section 457(e)(1)(A).”.

(c) Effective Date. The amendments made by this section shall apply to taxable years beginning after December 31, 2007.

The Farm Bill was approved by the Senate on December 14, 2007, and is headed to conference committee to reconcile the difference between the House and Senate versions of the bill.

Technorati Tags: Pension Protection Act, ppa, roth, 457(b), ERISA

Full post as published by Pension Protection Act Blog on January 07, 2008 (boomark / email).