HomeMy WebLinkAbout457B Retirement Plan457(B) RETIREMENT PLAN
THE 457(B)
1.What is a 457(b) retirement plan?
•Designed for state and local government
•Local public entity can adopt State Plan
•State Plan with Nationwide in Idaho
2.How does it work?
•Much the same as other plans, the 457(b) contributes up to the Federal
Limit ($19,500 plus catchup amounts) into a retirement account through
salary reductions on behalf of the participants
ADVANTAGES OF 457 (B) STATE PLAN:
•Designed to augment (not replace) current retirement plans at no additional plan
cost to the city
•Employees eligible to participate immediately or upon hire
•No six month waiting period like 401K
•Federal max of $19,500 in Both 457B and 401K allowed (and catchup amounts)
•Ability to withdraw from the plan upon separation from employment and before age
59 ½ without 10% penalty
•Ability to do a loan for ½ of balance up to $50,000
•Access to a Financial Planner/Personal Retirement Consultant (Mark Knudson)
Options
•Tax-Deferred Contributions and Earnings
•Roth IRA-Contributions pre-taxed with Earnings not subject to tax
Investment types available:
•Mutual Funds
•Target Funds
•Bonds
•Fixed Account-Guaranteed rate when invest, but will fluctuate with market adjustments periodically
•Individual Stocks (No fee for online trades, but $25 if use broker placed trade by phone).
•State sponsored additional incentives for signing up with a new account
•defer at least 5% of annual income, receive $200 from the State
•Between 3% and 5% of annual income, receive $100 from the State
•Ability to elect an automatic bump in contributions from year to year
ADVANTAGES OF 457 (B) STATE PLAN (CONTINUED):
CITY PARTICIPATION
•Approve Adoption Resolution along with adoption board meeting minutes
•No RFP required when adopting State Plan
•No administrative fees
•No City matching required
•City would administer plan through payroll
•City Incentive for signing up
•$100 up front if contribute 3% or more and commit to 12 month minimum
EMPLOYEE PARTICIPATION
•Available to Full Time Employees Only
•Complete and sign Enrollment Form
•Complete and sign Schwab Limited Power of
Attorney Form (Only those wanting to do individual stocks)
STAFF RECOMMENDATION
•Seeking a motion from the City Council to adopt
the state plan with sign up incentives as presented
and make available to Full Time Employees as a
voluntary option on October 1, 2020.
QUESTIONS?