In this session, we will provide a practical understanding of nonprofit deferred compensation (457 and 409a) plans. We will address the legal, tax, investment and practical administrative nuances to keep your plans operating properly, simply, and with minimal time and expense.

1. Thrive. Grow. Achieve.
457 Plan
Misconceptions
Clarified
Dennis Gogarty, CFP ®, AIF ®
Chase Deters, CFP®, ChFC®
Copyright Raffa Wealth Management, LLC All Rights Reserved

2. Foundation Investments and Best Practices / Page
INTRODUCTION
2
Raffa Wealth Management, LLC
• Independent Registered Investment Advisor
• An aggressive advocate for Foundations,
Associations, and Charities
• $566,616,024 in assets under management (as of
12/31/14)
• Ranked 19th in CNBC's Top 100 Fee-Only Wealth
Management Firms
• Principals with over 25 years of experience in
retirement plan consulting
• Affiliated with Raffa, PC and Raffa Financial
Services, Inc.

3. Foundation Investments and Best Practices / Page
AGENDA
3
457(b) Planning – Practical Considerations
•Recordkeeping Options
•3(38) vs. 3(21) Fiduciaries
•Participant Tax Planning

4. Foundation Investments and Best Practices / Page
RECORDKEEPING OPTIONS
4
Vender Choices
• Fully bundled with your 401(k)/403(b)
– Pro's
• Convenient and easy to administer
– Con's
• More expensive than other options
• Potentially limited investment choices
• Standalone brokerage account
– Pro's
• Typically the least expensive option
• Flexibile, participant driven expenses
– Con's
• Investment flexibility may not be desirable
• Additional vender/relationship to manage

5. Foundation Investments and Best Practices / Page
INVESTMENT FIDUCIARY
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Difference in Fiduciary Status
None
3(21)
Fiduciary
3(38)
Fiduciary
Description Level of Fiduciary Responsibility
Duty of loyalty to serve the exclusive best
interests of the plan participants and
beneficiaries
 
Duty of care to exercise the skill,
diligence, and prudence of a professional  
Shall have reasonable grounds for
believing recommendations are suitable   
Description Level of Fiduciary Authority
Makes recommendations to plan sponsor
  
Maintains discretion to make decisions
and implement changes 

6. Foundation Investments and Best Practices / Page
TAX CONSIDERATIONS
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Tax Planning
• Understand Tax Implications
– Ordinary income tax due upon "economic reciept"
– Tax deferral benefits cease once distribution is allowed
• Timing of Distributions
– Stagger distribution payments to avoid having more of
the distribution taxed at higher rates
– Undistributed balance still subject to "risk of forfeiture"

7. Foundation Investments and Best Practices / Page
DISCLOSURE
7
This presentation summarizes the results of an informal, non-scientific study compiled by
analyzing the results of surveys completed by nonprofit finance executives.
This presentation is for information purposes only. Participant responses have not been
verified. Data analysis was performed by Raffa Wealth Management.
When stating “nonprofit” responses it should be noted that all responses are limited to the
nonprofits that participated in the survey. No broader implications should be assumed.
This information was gathered from reliable sources but we cannot guarantee accuracy.
Any performance related information is based on participant responses and have not been
verified. Past performance is not an indication of future results and any investment can lose
value.
Performance results have been compared to balanced benchmark portfolios comprised of
broad market indexes. The benchmarks were selected because we feel they are the broadest
market benchmark available in each broad category. They may or may not be suitable
benchmarks for comparison to any particular investor’s portfolio or for the average results
reflected in this study. You should consult with your investment professional to determine
suitable benchmarks for your portfolio.
Indexes do not reflect the fees associated with actual investments and such fees would
reduce the performance illustrated.

8. DEFERRED COMPENSATION FOR TAX EXEMPT
EMPLOYERS
PLAN DESIGN, ADMINISTRATION AND LEGAL ISSUES UNDER
SECTIONS 457 AND 409A OF THE INTERNAL REVENUE CODE
KURT LAWSON
KURT.LAWSON@HOGANLOVELLS.COM
OCTOBER 29, 2015

9. SECTION 457 – OVERVIEW
IMPORTANT GUIDANCE
• Final Regulations
• Proposed Regulations
• Model Language
• Other Significant Guidance
PLANS TO WHICH IT APPLIES
• Meaning of “Plan”
• Meaning of “Deferred Compensation”
• Meaning of “Eligible Employer”
• Coverage of Non-Employees
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10. SECTION 457(B) USES, REQUIREMENTS
AND
TRAPS FOR THE UNWARY
USES OF SECTION 457(B) PLANS
WRITTEN PLAN REQUIREMENT
REQUIREMENTS FOR SALARY REDUCTION ELECTIONS
COVERAGE AND NONDISCRIMINATION REQUIREMENTS
EFFECT OF VESTING SCHEDULES AND REQUIREMENTS
PERMITTED AND REQUIRED FUNDING VEHICLES
PLAN-LEVEL LIMITS ON DEFERRALS
INDIVIDUAL-LEVEL LIMITS ON DEFERRALS
RULES REGARDING TIMING OF DISTRIBUTIONS
TIMING OF TAXATION BASED ON RECEIPT
10

11. SECTION 457(F) USES, REQUIREMENTS
AND
TRAPS FOR THE UNWARY
USES OF SECTION 457(F) PLANS
NO WRITTEN PLAN REQUIREMENT
NO COVERAGE OR NONDISCRIMINATION REQUIREMENTS
EFFECT OF VESTING SCHEDULES AND REQUIREMENTS
SALARY REDUCTION ELECTIONS CAN BE PROBLEMATIC
PERMITTED FUNDING VEHICLES
NO LIMITS ON DEFERRALS
NO RULES REGARDING TIMING OF DISTRIBUTIONS
TIMING OF TAXATION BASED ON VESTING
MEANING OF “SUBSTANTIAL RISK OF FORFEITURE”
11

12. SECTION 409A – OVERVIEW
PLANS TO WHICH IT APPLIES
• In General
• Meaning of “Plan”
• Meaning of “Deferred Compensation”
• Coverage of Non-Employees
• Impact on Section 457 Plans
REQUIREMENTS AND TRAPS FOR THE UNWARY
• Nature of the Requirements
• Significant Consequences of Failure
• Restrictions on Payment Events
• Requirements for Payment Elections
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13. ADMINISTRATIVE ISSUES
EMPLOYMENT TAXES
• Income Tax Withholding
• FICA Taxation
• Information Reporting
ANNUAL REPORTING
• Form 990
• Form 5500
IRS REVIEW OF SECTION 457 PLANS
13

14. WWW.HOGANLOVELLS.COM
"HOGAN LOVELLS" OR THE "FIRM" IS AN INTERNATIONAL LEGAL PRACTICE THAT INCLUDES HOGAN LOVELLS INTERNATIONAL LLP, HOGAN LOVELLS US LLP AND THEIR AFFILIATED BUSINESSES.
THE WORD "PARTNER" IS USED TO DESCRIBE A PARTNER OR MEMBER OF HOGAN LOVELLS INTERNATIONAL LLP, HOGAN LOVELLS US LLP OR ANY OF THEIR AFFILIATED ENTITIES OR ANY EMPLOYEE OR CONSULTANT
WITH EQUIVALENT STANDING. CERTAIN INDIVIDUALS, WHO ARE DESIGNATED AS PARTNERS, BUT WHO ARE NOT MEMBERS OF HOGAN LOVELLS INTERNATIONAL LLP, DO NOT HOLD QUALIFICATIONS EQUIVALENT TO
MEMBERS.
FOR MORE INFORMATION ABOUT HOGAN LOVELLS, THE PARTNERS AND THEIR QUALIFICATIONS, SEE WWW.HOGANLOVELLS.COM.
WHERE CASE STUDIES ARE INCLUDED, RESULTS ACHIEVED DO NOT GUARANTEE SIMILAR OUTCOMES FOR OTHER CLIENTS. ATTORNEY ADVERTISING.
© HOGAN LOVELLS 2015. ALL RIGHTS RESERVED.
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