I have never helped a client setup the accounting for a 457 plan and have been asked to do so. Since this is an unfunded arrangement the client has to keep the accounting on the company books. My initial thoughts are to show the 457 plan assets as an asset with an offset using "retirement plan liability"or something similar. As distributions are paid out they would be expensed. Am I missing anything here?

Accounting rules do not allow the offsetting of assets (which are not in a separate trust) with liabilities. They are separate and distinct items on the balance sheet. (You said this is an unfunded plan -- what assets are you referring to?)

The expense (the increase in their account) is NOW, not when they are paid out. The payment out just offsets the accrued expense (the payment out is actually a contribution to the plan, which is not an expense, it is just cash flow).

The assets are going to be held in the general assets of the employer. You are incorrect about the offset. You would record a debit to "retirement plan asset" and a credit to "retirement plan liability" as used by double entry accounting. The term offset might not be a good word to use here. I may be misinterpreting you.

Are you saying that the employer would never record any journal entries until distributions are actually made?

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Where did the "Opening Balance" in this "Retirement plan asset" Account come from against which you plan to record this debit?

It is a new plan. I figured the first contribution to the plan would be a debit to the "retirement plan assets" and a credit to "retirement plan liability".