G O V E R N M E N T A L P L A N S O V E R V I E W i This table intends to provide an overview of retirement plan rules as they relate to and affect governmental employers sponsoring 401(a) and 457(b) plans at the federal level. Note that state law can sometimes affect and potentially even alter the application of these general federal rules.

Provision Governmental 401(a) Governmental 457(b)

ERISA Coverage ERISA does not apply, but may form the basis of plan governance best practices.

ERISA does not apply, but may form the basis of plan governance best practices.

Written Plan Document

Required. Required.

Prototype Plan Document Program

Available. Not Available.

Model Plan Document Program

Available. Available.

Determination Letter

Not required, but recommended. Not available.

Eligibility and Participation Any employee of the employer may be eligible.

Only employees and independent contractors who perform services for an eligible governmental employer may defer compensation into a governmental 457(b) plan. Employees may be automatically enrolled.

Exclusive Benefit Rule

Applies. Applies.

Prohibited Transaction Rules Section 503 of the Internal Revenue Code specifies prohibited transactions applicable to governmental plans. Specific state laws may also apply.

Section 503 of the Internal Revenue Code specifies prohibited transactions applicable to governmental plans. Specific state laws may also apply.

Provision Governmental 401(a) Governmental 457(b)

Pre-tax Deferral Limit Not applicable; no pre-tax deferrals. Lesser of 100% of includible compensation or $17,500 limit in 2013 for employee and employer contributions combined, including deferrals of sick, vacation and back pay if allowed by the plan. Employer contributions reduce the 457(e) deferral limits when those contributions vest and are subject to any applicable FICA taxes. Employee contributions are mandated in the event of a Social Security replacement plan. Excess contribution amount must be distributed as soon as practicable upon discovery and is taxable to the participant in the year the excess deferral was made to the plan.

Roth Not applicable. May allow Roth contributions and in-plan Roth conversions.

Catch-up Contributions Not applicable; employer only money with employee after-tax contributions potentially depending on plan design.

Participants age 50 or older during the calendar year may make additional contributions up to $5,500 in 2013, subject to future indexing in $500 increments. Participants within 3 years of normal retirement age may make contributions up to twice the otherwise allowable annual amount to the extent of underutilized deferrals from prior years. Cannot use both types of catch-up in the same year (the one allowing the maximum contribution must be used).

Remittance of Employee Deferrals

Not applicable. Remit employer contributions in accordance with timing prescribed by the plan document.

Must remit deferrals within a period that is reasonable for proper administration of the plan. Generally this period, based on the 457 model amendments, should be no longer than 15 business days following the end of the month in which the amount would have been paid to the participant. State law may apply.

Provision Governmental 401(a) Governmental 457(b)

Section 415 Contribution Limits

Applies. In 2013, limit is the lesser of $51,000 or 100% of compensation, subject to future indexing in $1,000 increments. Picked-up contributions under section 414(h)(2) are treated as if they were not part of the employee's compensation for purposes of the section 415 limits, and they are not part of the annual addition. However, benefits generated by picked-up contributions are subject to the limits of section 415(b).

Does not apply.

Section 401(a)(17) Compensation Limit

Applies. Limit is $255,000 in 2013, subject to future indexing in $5,000 increments.

Does not apply.

Trust Requirement Yes.

Yes.

Funding Requirement Funded; not subject to the creditors of the employer.

Funded; not subject to the creditors of the employer.

414(h) Pick-up Contributions

Governmental employers are permitted to pick-up employee contributions in certain circumstances.

Governmental employers are permitted to pick-up employee contributions in certain circumstances.

Vesting All employer contributions must be fully vested either after three years (i.e. 100% vested after 3 years of service), or in 20% increments beginning with the employee's second year of service. Full vesting is required after the employee has completed six years of service.

Employee contributions are vested immediately. Delayed vesting of employer contributions should be avoided, as it could result in participants exceeding annual limits.

QDROs Apply. Rules may be broader than ERISA exemptions would allow due to state law.

Apply. Rules may be broader than ERISA exemptions would allow due to state law.

Distributable Events Severance from service, age 59½, disability or death. Hardship may be available.

Severance from service, age 70½ or death. Unforeseeable emergency may be available. Small account balances up to $5,000 may be distributed without the participant's consent.

Distribution Options Lump-sum, annuity, installments as permitted by the plan. QJSA rules do not apply.

Lump-sum, annuity, installments as permitted by the plan. QJSA rules do not apply.

Provision Governmental 401(a) Governmental 457(b)

Early Withdrawal Yes, 10% before age 59½, including any amounts rolled over from 457(b) governmental plans.

Not applicable to amounts deferred under Section 457(b). 10% before age 59½ for amounts rolled over from 403(b) and qualified plans.

Rollovers Permitted to IRA, 401(a), 401(k), governmental 457(b) and 403(b) plans that accept it. Not permitted to nongovernmental 457(b) plans. Permitted from IRA, 401(a), 401(k), governmental 457(b) and 403(b) plans if allowed by plan provisions. Not permitted from nongovernmental 457(b) or nonqualified plans.

Permitted to IRA, 401(a), 401(k), governmental 457(b) and 403(b) plans that accept it. Not permitted to nongovernmental 457(b) plans. Permitted from IRA, 401(a), 401(k), governmental 457(b) and 403(b) plans if allowed by plan provisions. Not permitted from nongovernmental 457(b) or nonqualified plans.

Minimum Required Distributions

A governmental plan must meet the distribution requirements of section 401(a)(9), which apply beginning on (a) the later of the April 1 of the calendar year following the calendar year in which the employee attains age 70½ or the April 1 of the calendar following the calendar year in which the employee retires, or (b) the employee's death.

A governmental plan must meet the distribution requirements of section 401(a)(9), which apply beginning on (a) the later of the April 1 of the calendar year following the calendar year in which the employee attains age 70½ or the April 1 of the calendar following the calendar year in which the employee retires, or (b) the employee's death.

Taxability Amounts are taxable when distributed. Check state law.

Amounts are taxable when distributed. Check state law.

Withholding Reported on 1099-R; 20% withholding applies to eligible rollover distributions and special tax notice is required.

Reported on 1099-R; 20% withholding applies to eligible rollover distributions and special tax notice is required.

Purchase of Service Credit from a Defined Benefit Plan

Plan assets may be transferred to a DB plan to allow for the purchase of service credits within that plan.

Plan assets may be transferred to a DB plan to allow for the purchase of service credits within that plan.

Loans Allowed, subject to 72(p) and plan rules. Allowed, subject to 72(p) and plan rules.

Multnomah Group, Inc. Phone: (888) 559-0159 Fax: (800) 997-3010 www.multnomahgroup.com

i Information contained herein is provided “as is” for general informational purposes only and is not intended to be completely comprehensive regarding the particular subject matter. While Multnomah Group takes pride in providing accurate and up to date information, we do not represent, guarantee, or provide any warranties (express or implied) regarding the completeness, accuracy, or currency of information or its suitability for any particular purpose. Receipt of information herein does not create an adviser-client relationship between Multnomah Group and you. Neither Multnomah Group nor any of our advisory affiliates provide tax or legal advice or opinions. You should consult with your own tax or legal adviser for advice about your specific situation.

Provision Governmental 401(a) Governmental 457(b)

Nondiscrimination (generally)

Under the Age Discrimination in Employment Act, a governmental plan cannot limit or reduce benefit accruals on account of age and may not prohibit plan participation on account of age. Under Title VII of the Civil Rights Act of 1964, governmental plans cannot discriminate in contributions or benefits on the basis of sex. Other federal, state, and local civil rights statutes may also apply.

Under the Age Discrimination in Employment Act, a governmental plan cannot limit or reduce benefit accruals on account of age and may not prohibit plan participation on account of age. Under Title VII of the Civil Rights Act of 1964, governmental plans cannot discriminate in contributions or benefits on the basis of sex. Other federal, state, and local civil rights statutes may also apply.

401(a)(4) and 401(m) Nondiscrimination Testing

Does not apply. Does not apply.

410(b) Minimum Coverage Testing

Does not apply. Does not apply.

416 Top-Heavy Testing Does not apply. Does not apply.

Form 5500 Filing Requirement

Does not apply. Does not apply.