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Prior to January 1, 1999, all section 457(b) plans were considered unfunded. As a result, plan assets were considered property of the employer which was subject to the claims of the general creditors of the employer, and the participant possessed a contractual claim against the employer. Amounts  became taxable to the participant when they were paid or made available. Distributions to plan participants were treated for income tax and withholding and reporting purposes as wages under section 3402.

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  • October 12, 2008 Create Date
  • January 21, 2020 Last Updated
Federal Income Tax Withholding/Reporting Requirements for Section 457 Distributions