4.26 Ark. Code R. 51-414

Current through Register Vol. 49, No. 10, October, 2024

Rule 4.26-51-414 - Deferred Compensation Plans - Section 457 Plan Distributions

Amounts that a participant defers under an "eligible deferred compensation plan" of a tax-exempt or state or local governmental employer (i.e., a "section 457 plan") are includible in gross income after the participant separates from service only in the tax year in which the amounts are actually paid or otherwise "made available" to the participant.

Amounts deferred under a section 457 plan generally may not be "made available" to an employee before the earlier of: (a) the calendar year in which the participant attains age 701/2, (b) when the participant is separated from service with the employer, or (c) when the participant is faced with an unforeseeable emergency.

Amounts payable are not treated as "made available," and thus, will neither be includible in a participant's gross income under the constructive receipt rules, nor run afoul of the Code Sec. 457 distribution rules, in the following circumstances:

In-service section 457 plan distributions are not treated as "made available" if:

(1) the total amount payable doesn't exceed $3,500;

(2) There has been no prior distribution from the 457 plan to the participant. IRC Sec. 457(e)(9)(A).

4.26 Ark. Code R. 51-414