Non-Governmental 457(b) Deferred Compensation Plans and the COVID-19 Economy

Non-Governmental 457(b) Deferred Compensation Plans and the COVID-19 Economy

Fulcrum Partners Deferred Compensation News

Internal Revenue Code Section 457 provides tax-advantaged treatment for certain nonqualified deferred compensation plans. Included are both 457 plans and 457(b) plans. The focus of this update is the non-governmental 457(b) Top Hat plan.

457(b) Deferred Compensation Plans limit plan participation to groups of highly compensated employees or groups of executives, managers, directors or officers. Contributions to 457(b) plans may include employee salary deferrals and employer contributions. Principal Life, a member of the Principal Financial Group®, has published a timely report, titled, “Answering questions about COVID-19 and your non-governmental 457(b) plans.

Deferred Compensation News and Fulcrum Partners are pleased to share this report with you, offering insights and answers regarding questions you may have about the Unforeseeable Emergency distribution option and other terms and conditions of your plan, either as the plan sponsor or the plan participant. For example:

Q. “What if my plan does not have an Unforeseeable Emergency distribution option?”

A. “A plan sponsor may amend their plan to add Unforeseeable Emergency as a permissible distribution event effective once the proper documentation is completed.”

Q. “What about contributions for employees with reduced shifts or pay?”

A. “Participant deferral elections should be honored through the remainder of the month, but may be adjusted going forward. Keep in mind, most participants have elected a percentage of their pay to be deferred, and if their pay level is decreased, this will decrease the amount to be deferred.”

You can #ReadMore COVID-19 related updates here:

Check in at Deferred Compensation News daily, was the team at Fulcrum Partners continues to make relevant updates available or contact us directly for individual assistance: Fulcrum Partners Team.

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Principal is not affiliated with Valmark Securities, Inc. and Valmark Advisers, Inc.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Any tax advice contained herein is of a general nature. You should seek specific advice from your tax professional before pursuing any idea contemplated herein.

Securities offered through Lion Street Financial, LLC (LSF) and Valmark Securities, Inc. (VSI), each a member of FINRA and SIPC. Investment advisory services offered through CapAcuity, LLC; Lion Street Advisors, LLC (LSF) and Valmark Advisers, Inc. (VAI), each an SEC registered investment advisor. Please refer to your investment advisory agreement and the Form ADV disclosures provided to you for more information. VAI/VSI, LSF and BDO Alliance USA are non-affiliated entities and separate entities from Fulcrum Partners and CapAcuity, LLC.