Which employer type is NOT eligible to sponsor a 457 plan?

The eligibility for sponsoring a 457 plan is primarily linked to the type of employer. A 457 plan is a non-qualified deferred compensation plan that is available to certain categories of employers, primarily governmental entities and certain types of tax-exempt organizations.

State and local employers, as well as non-governmental tax-exempt organizations, have the authority to establish 457 plans due to their specific structures and the allowance under the Internal Revenue Code for those types of plans. Healthcare organizations can also qualify if they are non-profit and meet the requirements set forth in the regulations.

For-profit corporations, however, do not qualify to sponsor a 457 plan. The plans are specifically designed to benefit employees of state and local governments and certain tax-exempt organizations rather than for-profit entities. This establishes a clear distinction conducive to the purpose and structure of 457 plans, which aim to provide a tax-advantaged savings opportunity predominantly for employees in the public sector and eligible non-profit organizations. Thus, for-profit corporations are explicitly excluded from this eligibility and cannot offer a 457 plan to their employees.