Opinion Number ( 2004 )

Dear Mr. Dionisi:

On behalf of the Louisiana Deferred Compensation Commission, you have requested the opinion of this office as to whether or not the enabling legislation of the Louisiana Public Employee's Deferred Compensation Plan (the Plan"), specifically LSA-R.S. 42:1301 — 1308, authorizes the institution of a loan policy to enable Plan participants to make loans against their accounts.

According to your advice the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001, as well as certain treasury regulations released in 2003, authorizes plans, such as the Plan, which were established in accordance with Section 457 of the Internal Revenue Code ("Section 457")¹ to enact loan provisions pursuant to which plan participants can make loans against their accounts.

We call your attention to LSA-R.S. 42:1303(6), which provide the Plan's Commission with the following authority:

"To agree by contract with any person to defer, in accordance with Section 457 of the United States Internal Revenue Code, as amended, future compensation which, except for the terms of the contract, would have been payable to such person."

This provision of law clearly authorizes the Commission to provide Plan participants with deferred compensation in accordance with the terms of Section 457. In our opinion, LSA-R.S. 42:1303(6) authorizes the Commission to offer Plan participants any benefit sanctioned by Section 457, subject to and in accordance with the terms and conditions of Section 457.

In response to your request, please be advised that in the opinion of this office, in accordance with LSA-R.S. 42:1303(6), the Louisiana Public Employee's Deferred Compensation Plan may institute a loan policy for the benefits of its participants, as long as the loan policy is in accordance with Section 457 of the Internal Revenue Code.

We trust the foregoing to be of assistance. Please do not hesitate to contact this office if we can be of assistance in other areas of the law.

Yours very truly,

CHARLES C. FOTI, JR.

Attorney General

BY: ________________________________

JEANNE-MARIE ZERINGUE BARHAM Assistant Attorney General

CCF, jr./JMZB/dam

¹ LSA-R.S. 42:1301(9), recognizes the Plan's establishment "pursuant to state statute and in accordance with Section 457 of the Internal Revenue Code".