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457 Plan

401k & 457 Participation Guide      457 Forms     FAQ's

The 457 plan is a type of tax advantaged defined contribution supplemental retirement plan that is available for governmental employers in the United States. The employer provides the plan and the employee defers compensation into it on a pre-tax basis. For the most part the plan operates similarly to a 401(k) or 403(b) plan most people are familiar with. The key difference is unlike a 401(k) plan, there is no 10% penalty for withdrawal before the age of 59 1/2 (although the withdrawal is subject to ordinary income taxation).  The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) made a number of changes in how the 457 plans are treated; the most notable of which is the coordination of benefits limitation was removed. This allows a person whose employer has a 401(k) or 403(b) and a 457 to defer the maximum contribution amounts to both plans instead of coordinating the total and only being able to meet a single limit amount. Thus a participant can contribute the maximum $18,000 for 2015 into their 401(k) and also the maximum $18,000 into their 457 plan. If that person's age is at least 50 at the end of the current tax year, they can contribute the additional catch up amount into each plan also, meaning an additional $6,000 into the 401(k) and another $6,000 into their 457. The total would then be $48,000 deferred.  Governmental 457 plans may be rolled into other types of retirement plans with few restrictions beyond the normal ones for any other type of employer provided plan, which includes separation of service or disability.

Catch-up provisions

The 457 plan allows for two types of catch-up provisions. The first is similar to other defined contribution plans and amounts to an additional $6,000 that can be contributed as noted above. The second is much more complicated and can be elected instead by an employee that is within 3 years of retirement age (and perhaps eligible retirement at any age). This second catch-up option is equal to the full employee deferral limit or another $18,000 for 2015. Thus, a person over 50 within 3 years of retirement and both a 457 and a 401(k) could possibably defer a total of $60,000 into their retirement plans by utilizing all of their catch-up provisions. The second type of catch-up provision is limited to unused deferral limits from previous years. An employee that had deferred the maximum amount of money into the 457 plan every year they were employed previously would not be able to utilize this extra catch-up.

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Deferred Compensation (401k, 457, 403b) Forms:
     Total Rewards/ Benefits & Retirement Office
     600 Henley St, #115
     Knoxville, TN  37996-4115

Insurance Forms:
     Insurance & Retirement
     P115 Andy Holt Tower
     1331 Circle Park
     Knoxville, TN  37996-0100

Retirement Forms:
     Total Rewards/ Benefits & Retirement Office
     600 Henley St, #115
     Knoxville, TN  37996-4115

Other Links:
Deferred Compensation (State site)
Deferred Compensation (Empower Retirement site)
Optional Retirement Program (ORP State site)
Tennessee Consolidated Retirement System (TCRS State site)
Office of Personnel Management- OPM (CSRS & FERS)