457(b) plan 401(k) plan Can state or local government maintain? Yes No, unless adopted before May 5, 1986 Written plan document required? Yes Yes Eligible participants Employees or independent contractors who perform services for the employer may participate For the exclusive benefit of employees; independent contractors can’t participate Coverage; Nondiscrimination testing No Yes Salary reduction contributions (employee elective deferrals) permitted? Yes Yes Ability to designate all or portion of salary reduction contribution as a Roth contribution Yes Yes Employer contributions permitted? Yes Yes Salary reduction contribution limit (generally) Lesser of applicable dollar limit ($19,500 in 2021 and in 2020 and $19,000 in 2019) or 100% of participant’s includible compensation Salary reduction up to a maximum of ($19,500 in 2021 and in 2020 and $19,000 in 2019) Increased salary reduction limit for final 3 years before attaining normal retirement age Lesser of: 2 x applicable dollar limit ($39,000 in 2021 and in 2020 and $38,000 in 2019) or applicable dollar limit plus sum of unused deferrals in prior years (to the extent that deferrals made were less than the applicable limits on deferrals; age 50 catch-up contributions aren’t counted for this purpose) Note: Can’t use the increased limit if using age 50 catch-up contributions. In years when employee is eligible to take advantage of both, the employee can use the higher of the two increases to the limit. No increased limits Salary reduction contribution limits - age 50 catch-up contributions (for individuals who are 50 or over at the end of the calendar year) Salary reduction dollar limit increased by $6,500 in 2021 and in 2020 and $6,000 in 2019 (up to a total of $26,000 in 2021 and in 2020 and $25,000 in 2019) Note: See above. Can’t use in years that a participant is taking advantage of the increased limit during the final 3 years before attaining normal retirement age. Salary reduction dollar limit increased by $6,500 (up to a total $6,500 in in 2021 and in 2020 and $6,000 in 2019 (up to a total of $26,000 in 2021 and in 2020 and $25,000 in 2019) Timing of election to make salary reduction contribution Before the first day of the month in which the compensation is paid or made available. Before the compensation is paid or made available, but no less frequent than annually. Total contribution limits (both salary reduction and employer contributions) Same as limit for salary reduction contributions. Therefore, any employer contribution will have the effect of reducing the limit on the amount of salary reduction contribution an employee could make (and vice versa) Elective deferrals plus employer contributions plus allocated forfeitures can't exceed the lesser of: $58,000 in 2021 ($57,000 in 2020) or employee’s compensation Contributions to trust? Yes Yes Loans that are not treated as taxable distributions to the participant permitted? Yes Yes Hardship distributions permitted? Yes, if both: 1. the distribution is required as a result of an unforeseeable emergency for example, illness, accident, natural disaster, other extraordinary and unforeseeable circumstances arising from events beyond the participant’s (or beneficiary’s) control 2. the participant exhausted other sources of financing and the amount distributed is necessary to satisfy the emergency need (and tax liability arising from distribution) Yes, if both: 1. the distribution is required to meet an immediate and heavy financial need. Note: the need doesn’t have to arise from an unforeseeable emergency, for example, medical expenses, purchase of a principal residence, tuition and related room and board expenses for employee, employee’s spouse or dependents, expenses required to prevent eviction/foreclosure 2. the participant exhausted other sources of financing and the amount distributed is necessary to satisfy the financial need (and tax liability arising from distribution) Automatic Enrollment permitted? Yes Yes Eligible Automatic Contribution Arrangement (EACA) permitted? Yes Yes Distributable events Attainment of age 70 ½ Severance from employment Unforeseeable emergency (see above) Plan termination Qualified domestic relations order Small account distribution (not to exceed $5,000) Permissible EACA withdrawals Attainment of age 59 ½ Severance from employment Hardship (see above) Death, disability Plan termination Required minimum distributions under Internal Revenue Code Section 401(a)(9) Yes Yes Rollovers to other eligible retirement plans (401(k), 403(b), governmental 457(b), IRAs) Yes Yes Availability of statutory period to correct plan for failure to meet applicable requirements Until 1st day of the plan year beginning more than 180 days after notification by the IRS No Availability of IRS correction programs including the Employee Plans Compliance Resolution System (EPCRS) under Rev. Proc. 2021-30 Can apply for a closing agreement with a proposal to correct failures. Proposals are evaluated using EPCRS standards. Yes, if eligibility requirements are met.