How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Milan Vaishnav Your Own Question

Milan Vaishnav
Milan Vaishnav, Financial Advisor
Category: Finance
Satisfied Customers: 972
Experience:  Technical Analyst in Financial Markets -- Experience of more than 10 years in consulting
17158941
Type Your Finance Question Here...
Milan Vaishnav is online now
A new question is answered every 9 seconds

What is the accounting entry to set up a 457(f)..(Deferred

Customer Question

What is the accounting entry to set up a 457(f)..(Deferred Compensation Plan) account
The employer OWNS the account.....................so...........

Dr 457 Annuity Purchased
   Cr Cash
BUT!
The liabilty (deferred compensation)"owed" to the employee later on is the entry I'm confused on

Dr. ???
    Cr Liability for Deferred Compensation Account
Submitted: 5 years ago.
Category: Finance
Expert:  Milan Vaishnav replied 5 years ago.

Dear Friend,

 

I presume you are setting up a 457(f) account for you employee and a employee contributes it from his salary.

 

The entry would be --- when salary is paid, (the figures mentioned are just illustrations)

 

Salary account DR 120 $

TO Cash / Bank 100$

TO 457(f) A/c 20$

 

This way the salary entry is complete and the 457(f) stands in credit of $ 20.

 

When this needs to be setteled / paid in future, the entry would be

457(f) A/c DR $20

TO Bank / Cash A/c $20

 

This would complete the transaction.

 

I hope the above helps...

Regards,

 

 

Customer: replied 5 years ago.

Actually no---the employee is not deferring income from his salary (paycheck) but rather the employer is purchasing upfront an annuity and the earnings on this annuity (deposit) years down the road is provided to the employee (at retirement) and the original deposit reverts back to the employer So while I understand that the entry (entries) on a monthly (or quarterly ??) basis for interest (or investment earnings) received on the annuity would be:

 

Dr. Annuity Purcahsed (457(f) Account)

Cr Liabilty for Deferred Account ( 457(f) ) "earnings"...............

 

My question (concern) is....is there an INITIAL entry that needs to be set up for this future liabilty (the payout of accrued earnings through the years) ..SINCE..SINCE the EMPLOYER actually owns the annuity and NOT the employee like in a "normal" salary deferral situation (as you illustrated) ..(ie. 401K deferrals, 457 (b) deferrals, etc)

Expert:  Milan Vaishnav replied 5 years ago.

Dear Friend,

 

I understand now.

 

The intial entry should be as under:

(Here again the figures are for illustration purpose only)

 

When you purchase the annuity,

 

457(f) Annuity Purchased A/c DR $100

Interest Accrued (PAYABLE) A/c DR $20 (Interest that will be payable in the future)

TO Bank/Cash A/c $120

 

This will complete the entry in your books with the interest accured entered in the beginning.

 

I hope the above helps...

Regards,

 

 

Milan Vaishnav, Financial Advisor
Category: Finance
Satisfied Customers: 972
Experience: Technical Analyst in Financial Markets -- Experience of more than 10 years in consulting
Milan Vaishnav and 3 other Finance Specialists are ready to help you
Customer: replied 5 years ago.
Okay.....I think this may help--not sure though...... as I'm not sure I'll be remitting ALL the funds (the deposit AND (accrued) interest---since the "interest" (to be earned over 15 years ) is an unknown amount--thus I think we will only be remitting the deposit amount which again would be the DR to Annuity Purcahsed and a CR to Cash--But, I'll have to see what we actually get "billed" for -- either the deposit amount alone or the deposit plus an accrued interest ("benefit") payable to the employee at retirement.
Expert:  Milan Vaishnav replied 5 years ago.

Dear Friend,

 

This should help. However, if you have any other pattern of transaction, you can describe here in paragraph and I shall put the entry for you.

 

Never hesistate to get back to me anytime...

 

Regards,

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Rakhi Vasavada

    Financial and Legal Consultant

    Satisfied Customers:

    2073
    Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
< Last | Next >
  • http://ww2.justanswer.com/uploads/RA/rakhi.v/2012-7-3_14374_RakhiVasavadaL.64x64.jpeg Rakhi Vasavada's Avatar

    Rakhi Vasavada

    Financial and Legal Consultant

    Satisfied Customers:

    2073
    Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
  • http://ww2.justanswer.com/uploads/BU/BusinessTutor/2012-2-2_115741_Kouki2.64x64.jpg Manal Elkhoshkhany's Avatar

    Manal Elkhoshkhany

    Tutor

    Satisfied Customers:

    1890
    More than 5000 online tutoring sessions.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    1755
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JK/jkcpa/2011-1-16_182614_jkcpa.64x64.jpg JKCPA's Avatar

    JKCPA

    CPA

    Satisfied Customers:

    838
    Bachelors degree and CPA with Accounting experience.
  • http://ww2.justanswer.com/uploads/starside8/2010-2-16_55433_DSCN1175.JPG Eric's Avatar

    Eric

    Financial Manager

    Satisfied Customers:

    558
    Loan servicing, counseling and real estate expert. Foreclosure Expert and Financial Planner.
  • http://ww2.justanswer.com/uploads/FA/fastfile/2011-12-15_23139_Klein2011small.64x64.jpg R. Klein, EA's Avatar

    R. Klein, EA

    Accountant

    Satisfied Customers:

    397
    Intuit Ask a Tax Expert. QuickBooks Certified Pro Advisor (all editions)
  • http://ww2.justanswer.com/uploads/dkaplun/2009-05-17_173121_headshot_1_2.jpg Dimitry K., Esq.'s Avatar

    Dimitry K., Esq.

    Attorney

    Satisfied Customers:

    324
    NASD Licensed Rep, 1997-2001, Business Attorney
 
 
 

Related Finance Questions

Chat Now With A Financial Professional
Milan Vaishnav
Milan Vaishnav
966 Satisfied Customers
Technical Analyst in Financial Markets -- Experience of more than 10 years in consulting