In the provisions of the 457(b), an employee has limited options to obtain money if there is a need.

The first option is a hardship distribution. The IRS provides specific guidelines on what qualifies for the distribution. If it is determined that the distribution does not meet the criteria and the County authorizes the request, there is a possibility of an IRS audit. The County has complete responsibility when there is a determination that there is a violation of the program. The penalty could be a fine and/or our plans may become nonqualified plans (i.e. lose the tax exemption).

The second option for an employee to receive needed money is through a loan provision. The loan provision is between the
457(b) provider and the employee. Presently, two of the County's four providers have this provision. The loan is between the employee and the provider and is authorized by the 457(b) provisions. The provision guidelines are established by the IRS and the provider on the limits of how much an employee can borrow, the timeframe on which the money should be paid back, and the return of the investment. The provider can change the parameters of the loan, within the IRS guidelines. This provision limits the liabilities for the County.