United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office Health, Education, and Human Services Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1996-04-30 monographic deposited born digital 42 p. GA 1.13:HEHS-96-38 https://www.govinfo.gov/app/details/GAOREPORTS-HEHS-96-38 P0b002ee180382099 f:he96038 DGPO 2010-08-12 2011-03-24 GAOREPORTS-HEHS-96-38 machine generated eng fdlp REPORT GAOREPORTS-HEHS-96-38 HEHS-96-38 State employees Municipal employees Government retirement benefits Pension plan cost control Civil service pensions Retirement pensions Tax law Employee retirement plans Financial management Tax exempt status Orange County (CA) Los Angeles (CA) Chapter Report HEHS Pursuant to a congressional request, GAO reviewed the status of public pension funding, focusing on how plans established under Internal Revenue Code (IRC) section 457 differ from plans created under IRC sections 401(k) and 403(b).<p/>GAO found that: (1) most state and local government employees are covered under section 457 plans because the Tax Reform Act of 1986 prohibited state and local governments from establishing plans under sections 401(k) and 403(b); (2) section 457 plan participants risk losses if sponsoring governments go bankrupt or the deferred monies are mismanaged or lost; (3) section 457 does not require sponsoring governments to maintain deferred monies to pay future benefits; (4) section 457 plan participants risk losses because sponsoring governments may view deferred monies as available for public use; (5) while funds enrolled in section 401(k) and 403(b) plans can be transferred to investment retirement accounts (IRA) when the employee leaves state or local government employment, amounts payable from section 457 plans can only be rolled over into other section 457 plans; (6) section 457 plan participants must declare a fixed date for when they will begin receiving their benefits shortly after retiring or leaving employment; (7) according to IRS, the transfer of section 457 plan deferrals into IRA or allowing plan participants to change their distribution dates would create a taxable event or be incompatible with the plan's tax deferred condition of government ownership; (8) section 457 plans allow a lower maximum annual employee deferral and employer contribution than section 401(k) and 403(b) plans, and are not indexed; and (9) new legislation could increase the section 457 plan deferral and contribution limit and index section 457 plans to inflation. https://www.govinfo.gov/content/pkg/GAOREPORTS-HEHS-96-38/html/GAOREPORTS-HEHS-96-38.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-HEHS-96-38/pdf/GAOREPORTS-HEHS-96-38.pdf GAO/HEHS-96-38 https://www.govinfo.gov/app/details/GAOREPORTS-HEHS-96-38 Chapter Report GAO/HEHS-96-38; Public Pensions: Section 457 Plans Posed Greater Risk Than Other Supplemental Plans; State employees Municipal employees Government retirement benefits Pension plan cost control Civil service pensions Retirement pensions Tax law Employee retirement plans Financial management Tax exempt status Orange County (CA) Los Angeles (CA) Public Law 95-514