1
Eligible Deferred Compensation Plans under Section 457
Notice 2003-20
I.
PURPOSE AND SCOPE
This notice describes the withholding and reporting requirements applicable to
eligible deferred compensation plans described in § 457(b) of the Internal Revenue Code
("' 457(b) plans") for periods after December 31, 2001.
Specifically, this notice addresses --
$ income tax withholding and reporting with respect to annual deferrals made to a
' 457(b) plan;
$ income tax withholding and reporting with respect to distributions from a
' 457(b) plan, including changes for a § 457(b) plan established by a state or local
government employer enacted in the Economic Growth and Tax Relief
Reconciliation Act of 2001 (EGTRRA), Pub. L. No. 107-16;
$ Federal Insurance Contributions Act (FICA) payment and reporting with respect
to annual deferrals under a ' 457(b) plan;
$ employer identification numbers (EINs) used in connection with trusts
established under § 457(g); and
$ the application of annual reporting requirements to ' 457(b) plan administrators
and trustees holding assets of a ' 457(b) plan in accordance with § 457(g).
The rules provided in this notice apply to deferrals and distributions from eligible
' 457(b) plans made after December 31, 2001. This notice addresses only reporting and
withholding rules that apply to ' 457(b) plan participants who are or were employees of
state and local governments or tax-exempt organizations and does not cover special
reporting rules that may apply to § 457(b) plan participants who are or were independent
2
contractors. Notice 2000-38, 2000-2 C.B. 174, applies to ' 457(b) plan distributions
made before January 1, 2002, but see Section IX of this notice concerning its effective
date provisions.
II.
BACKGROUND
Section 457 provides rules for nonqualified deferred compensation plans
established by eligible employers. State and local governments and tax-exempt
organizations are eligible employers. They can establish either eligible