What is the difference between a 457 plan and a 401(a) plan?
A 457 plan is established under Section 457 of the Internal Revenue Code. Similar to a 401(k) plan, a 457 plan permits the deferral of Compensation by participants. A 457 plan may be maintained only by state or local governments or tax exempt employers. Like a 401(k) plan, there are limits on the annual amount that may be deferred. The Compensation which is deferred may be paid only upon attainment of age 70½, separation from service, an unforeseeable financial hardship or death. The Deferred Compensation Plan is a 457 plan. A 401(a) plan must meet many requirements under the Internal Revenue Code including requirements limiting contributions, governing coverage of participating employees, vesting, portability and the custody of investments. There are a number of different kinds of 401(a) plans, including defined benefit pension plans and defined contribution plans. BART’s Money Purchase Pension Plan is a 401(a) defined contribution plan.