3.96 M. Qualified Deferred Compensation Plans (IRC Sec. 457)

IMRF employers may enter into qualified deferred compensation agreements under Section 457 of the Internal Revenue Code.

Contributions to deferred compensation plans, such as an IRC section 457 plan A tax-exempt deferred compensation program that functions like a defined contribution plan and is made available to employees of state and federal governments and agencies. If you work for an IMRF employer other than a school district or public hospital, you may be familiar with a 457 deferred compensation plan., are included as IMRF earnings and must be reported to IMRF. Contributions to these plans do not reduce an employee's IMRF wages but do reduce an employee’s salary for tax purposes, even though the Internal Revenue Code may call them ”employer contributions."

Contributions to a 457 plan are always reportable to IMRF, regardless of the source of the funds, whether paid via a cafeteria plan, or whether paid by the employer in lieu of health insurance.