Comparison of 457 and 403 (b) Plans

457 plan

403(b) plan

Maximum limits on elective deferrals-under age 50

2007 - $15,500*

*Does not include traditional catch-up contributions allowed for 457 plans

2007 - $15,500*

*Does not include traditional catch-up contributions allowed for 403(b) plans

Maximum limits on elective deferrals - age 50 or older?

2007 - $20,500*

*Includes EGTRRA catch-up contribution; does not include traditional catch-up contributions allowed for 457 plans

2007 - $20,500*

*Includes EGTRRA catch-up contribution; does not include traditional catch-up contributions allowed for 403(b) plans

Maximum limits on total contributions?

Lesser of 100% of compensation or $45,000 (indexed to inflation in $1,000 increments) for 2007

Lesser of 100% of compensation or $45,000 (indexed to inflation in $1,000 increments) for 2007

Participant loans allowed?

Not allowed, however IRS recently announced they would reconsider this decision

Yes

Hardships allowed?

Yes, only for immediate and unforeseeable events; excludes hardship distributions for purchase of a residence, ordinary consumer debt, and education expenses.

No

Penalty for distribution prior to age 59 ½?

No

Yes, 10 % penalty

Minimum Distribution Requirements?

Later of 1) April 1 following the calendar year employee attains age 70 ½ or 2) calendar year following retirement

Later of 1) April 1 following the calendar year employee attains age 70 ½ or 2) calendar year following retirement

Social Security Withholding

FICA withholding at time of deferral

FICA withholding at time of deferral

Taxation of Benefits?

Taxed as ordinary income in the year received

Taxed as ordinary income in the year received

Can defer taxes on distributions by rolling them into a plan of the same type or an IRA?

Yes

Yes

Can defer taxes on distributions by rolling them into a plan of different type?

Yes

Yes

ERISA coverage?

No

No

Non-Discrimination Rules?

None

None

Top heavy rules apply?

No

No