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457 plan. The 457 plan is a type of nonqualified, [1] [2] tax advantaged deferred-compensation retirement plan that is available for governmental and certain nongovernmental employers in the United States. The employer provides the plan and the employee defers compensation into it on a pre tax or after-tax (Roth) basis.
The benefits under a non-qualified deferred compensation plan are considered to be "unfunded" as long as the employee has no rights in any specific assets of the employer, the deferred amounts are subject to the claims of the employer's general creditors, and the employee has no power to assign his or her rights. [11]
t. e. Section 409A of the United States Internal Revenue Code regulates nonqualified deferred compensation paid by a "service recipient" to a "service provider" by generally imposing a 20% excise tax when certain design or operational rules contained in the section are violated. Service recipients are generally employers, but those who hire ...
The plan has both advantages and risks. For premium support please call: 800-290-4726 more ways to reach us
A nonqualified deferred compensation (NQDC) plan is an arrangement that an employer and employee agree to where the employer accepts to pay the employee sometime in the future.
Penalties for nonqualified withdrawals. None. 10% federal tax plus regular federal and state taxes. Qualified expenses. Can be used for any purpose. Education-related expenses. Tax advantages. No. Yes
Types of retirement plans. Retirement plans are classified as either defined benefit plans or defined contribution plans, depending on how benefits are determined.. In a defined benefit (or pension) plan, benefits are calculated using a fixed formula that typically factors in final pay and service with an employer, and payments are made from a trust fund specifically dedicated to the plan.
The plan has both advantages and risks. For premium support please call: 800-290-4726 more ways to reach us