As a leading provider of retirement plan services, Legend can assist your organization
with the design, implementation and maintenance of a Roth §457(b) Governmental plan.
Eligible Employers
State, county and municipal governmental agencies
Eligible Employees
The Plan must allow all employees and/or independent contractors
Elective Deferral Limit
The lesser of 100% of the participant’s compensation or $17,000 in 2012
Over Age 50 Catch-Up
$5,500 in 2012 (may not be offered under all employer plans)
Retirement Catch-Up
A catch-up of the lesser of twice the normal limit or aggregate of amounts not deferred in prior plan years. Available only in three years prior to attaining normal retirement age as defined under the employer’s plan document
Taxation
Roth contributions are tax-free if paid out as qualified distributions (after five years have
elapsed since the first Roth contribution was made AND the participant has attained age 59½).
Non-qualified distributions are paid out pro rata return of principal and earnings
Loans1
Participants may take a loan in an amount that is
one half of the account value up to $50,000
Loans are an optional plan feature and must be qualified on an employer plan basis
Unforeseeable
Emergency Distributions
Participants may take distributions if the participant has experienced an unforeseeable emergency
Exchanges
Participants may exchange accounts
from one approved §457 vendor to another approved vendor that maintains Roth accounts (optional plan feature)
Transfers to & from Plan
Participants may transfer accounts from one employer’s §457 plan to a new employer’s §457 plan if both plans have provisions allowing the transfer and both plans allow Roth contributions (optional plan feature)
Rollovers into Plan
Participants may rollover distributions from other
eligible Roth retirement accounts into the employer’s §457 plan (optional plan feature)
Required Minimum Distributions
A participant must begin taking distributions at the later of the attainment of age 70½ or retirement. The first minimum distribution must be taken by April 1st of the year following the year containing this triggering event.
If the Roth §457 is rolled into a Roth IRA, minimum distributions may be avoided.
Salary deferral §457(b) accounts must be offered with all Roth §457(b) arrangements.
1Defaulting on a loan from a retirement plan constitutes a distribution from that plan.
Loans may affect cash values and death benefits.
Distributions from a retirement plan may be subject to federal income tax in the year
distributed and may incur an additional 10% penalty if the participant is under age 59½.
Legend Equities Corporation and its affiliates do not provide tax information or advice.