Opinion Number

Dear Dr. Cherry:

You have requested an opinion of the Attorney General regarding a tax sheltered annuity plan that is being considered by the Louisiana Health Care Authority (Authority) for the employees of Charity Hospital and Medical Center of Louisiana at New Orleans (Charity). You note that, currently, the Louisiana Deferred Compensation Plan (Plan) provides state, parish and municipal employees a before-tax investment plan in accordance with Section457 of the Internal Revenue Code. The Plan is an exclusive provider for the 457 program for state employees.

The Authority is reviewing a proposal to offer Charity employees a tax sheltered annuity plan as defined in Section 403(b) of the Internal Revenue Code. You ask whether the proposed implementation of the 403(b) plan is permitted under the laws of Louisiana. You also ask whether the implementation of the 403(b) plan would interfere with the right of Charity's employees to choose continued participation in the 457 plan.

In answer to your first question, we have reviewed the provisions of this state's statutory and constitutional laws and can find no prohibition against the implementation of a 403(b) plan. In answer to your second question the implementation of a 403(b) plan may not interfere with the right of Charity's employees to choose continued participation in the 457 plan. However,extreme care should be taken, under either plan, that the total amount of employee contributions eligible for shelter does not exceed that allowable under federal law. Further, we recommend that you contact Tom Brisendine with the Office of Chief Counsel, Internal Revenue Service, (202) 622-6030, regarding any questions pertaining to the 457 program. Also, any questions pertaining to the 403(b) plan, including the eligibility of the organization to offer the plan, should be directed to Roz Ferber, Office of Employee Benefits and Exempt Organizations, Internal Revenue Service, (202) 622-6209. We recommend that these individuals be contacted prior to the implementation of the 403(b) plan.

Should you have any additional questions concerning this matter, please do not hesitate to contact me.

With kindest regards, I am

Yours very truly,

RICHARD P. IEYOUB ATTORNEY GENERAL

BY: __________________________ ROBERT E. HARROUN, III Assistant Attorney General

RPI/ROB3/gbe

cc: Ellis Magee Joe Dionisi, Vice-President, Louisiana Deferred Compensation

William H. Cherry, M.D. Chief Executive Officer Louisiana Health Care Authority 8550 United Plaza Blvd., 4th Floor Baton Rouge, Louisiana 70809

Date Received:

Date Released:

Robert E. Harroun, III Assistant Attorney General