MEMORANDUM

TO: Agencies participating in the Kentucky Retirement System

FROM: William P. Hanes, Esq., Executive Director, Kentucky Retirement Systems

DATE: August 9, 2004

SUBJECT: Trustee-to-Trustee Transfers of Section 457 Funds

Kentucky Retirement Systems previously indicated that it would cease accepting trustee-to-trustee transfers of Section 457 funds for purchase of non-qualified service, school board summer months, or conversion of non-hazardous service to hazardous duty service after August 31, 2004. Pending a final review of this matter, Kentucky Retirement Systems will continue to accept trustee-to-trustee transfers of Section 457 funds for the above purchases. Final guidance on this issue is expected within sixty (60) days. Although Kentucky Retirement Systems will continue to accept trustee-to -trustee transfers of Section 457 funds, an administrator of a Section 457 plan may decline the transaction.

Please take action to notify your employees.