Advanced Underwriting Consultants

Ask the Experts – September 22, 2014

Ask the Experts!

The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers. Here’s the question of the day.

Question: Do Section 457(b) plans allow the age 50 catch-up contribution?

Answer: Yes and no—it depends on the type of employer maintaining the plan.

Section 457(b) plans may be established by only two types of employers: (1) states, agencies, or any political subdivision of a state (referred to as governmental 457(b) plans); or (2) tax-exempt entities (referred to as nongovernmental 457(b) plans).

Under the general rules, the contribution limit to a 457(b) plan is $17,500 (for 2014), which is equal to the elective deferral limit for Section 401(k) and 403(b) plans. Also similar to these employer-sponsored plans, governmental 457(b) plans allow an extra catch-up contribution of $5,500 for participants who are age 50 and older. However, this catch-up contribution is not offered to participants in a nongovernmental 457(b) plan.

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