Is there a choice of Deferred Compensation providers?
Yes. Two providers - ICMA-RC and Nationwide Retirement Solutions - are offered. You may contribute to one or both as long as the annual combined contributions do not exceed the IRS annual limit.
What are some of the 457 (b) plan features?
If you have an unforeseeable emergency, you may be able to withdraw money from your account as permitted under the IRC Section 457(b). An unforeseeable emergency is a severe financial hardship to the participant resulting from a sudden and unexpected illness or accident involving the participant or dependent, loss of the participant's property due to casualty or other extraordinary circumstances beyond the control of the participant and which are not covered by insurance.
The plan allows participants to apply for loans of up to 50% of their account balance, not to exceed $50,000. Two loan types are available‐ general purpose and for purchase of a primary residence. The maximum repayment periods are 5 years and 15 years for general and primary residence, respectively. Contact the providers directly for further details including interest rates and any applicable fees.
457 (b) plans do not include a 10% tax penalty for early distributions/withdrawals made, upon termination/retirement, prior to age 59 1/2 as is typical in 401(a) plans.
Upon termination of employment, or at retirement, you may keep the funds in the account(s), select from a variety of payment options or rollover the funds into another qualified Retirement plan or IRA. You are required to begin receiving Required Minimum Distributions (RMDs) the later of April 1 of the calendar year in which you turn age 70 1/2 or April 1 after the year in which you retire (if 70 1/2).
What happens to the money I contribute?
Both ICMA‐RC and Nationwide Retirement Solutions offer a selection of investment options ranging from conservative to less conservative based on your risk tolerance. You may wish to consult with an accountant or other professional for investment assistance.
What is a Deferred Compensation Plan?
A Deferred Compensation Plan is a tax deferred savings plan that may be used at retirement to supplement your income. It is governed by Internal Revenue Code (IRC) Section 457(b). You do not pay federal withholding income taxes on your payroll contributions. Only social security taxes are withheld.
What is the maximum which may be contributed towards a Flexible Spending Account (FSA) for 2017?
The 2017 IRS contributions limit is $18,000. For employees at least 50 years of age, the IRS permits an employee to contribute an additional $6,000 per year. This is called the age 50 "Catch-up" provision.
If you are within three years prior to the year you designate for Normal Retirement, you may be eligible to take advantage of a "special" catchup provision but no later than age 70 1/2. You may not utilize both (age 50 and special) catch-up provisions at the same time. Please visit the ICMA-RC and Nationwide links on the Benefits web page for more information.
Where may I obtain more information on the 457(b) deferred compensation offered?
You may contact the City's Deferred Compensation Plan Representatives, Yolanda Flores, ICMA-RC at 866-792-3259 or email firstname.lastname@example.org and Al Pinzon, Nationwide Retirement Solutions, at 954-232-7615 or email email@example.com. You may also check out the ICMA-RC and Nationwide Retirement Solutions site links on the Benefits webpage. ICMA-RC and Nationwide Retirement Solutions customer service may be reached at 1-800-669-7400 and 1-877-677-3678.