457 Deferred Compensation Plan Overview
Below are some of the important features about the Plan. This website is intended to be a summary of the plan provisions. In the event that a conflict exists between the information contained within this website and the plan document, the plan document provisions prevail. For more information, view the Frequently Asked Questions or contact us.
The Plan is established under Internal Revenue Code (IRC) Section 457. Under the Plan, you defer receiving a portion of your salary. It works like this:
- You decide, within certain legal limits, how much of your income you want to defer.
- The County (your employer) reduces your paycheck before income tax by that amount and forwards it to Voya Retirement Insurance and Annuity Company on a regular basis. All contributions are held by VoyaTM in an account in your name
- Contributions are invested in the investment options you have selected.
- The contributions and any earnings that accumulate are not taxed until you receive them. This is usually at retirement when you may be in a lower tax bracket.
Contributions under the Plan are made by participants through a reduction in salary. To participate, you must agree to defer a minimum of $10 per pay period. Under the Plan, the maximum annual contribution amount is set by Internal Revenue Service (IRS) guidelines on a yearly basis. You may view the current limits here.
Participants may be able to contribute amounts in excess of the applicable contributions limits if they are eligible for one of two catch-up provisions under the Plan.
You may be eligible for increased contributions:
- On and after you attain age 50 under a special age 50+ provision.
- During the three consecutive years prior to attaining Normal Retirement Age (NRA), as defined by the Plan, under a special catch-up provision.
- For general employees - You are eligible to elect this special catch-up provision in the year you reach age 52 if you have at least seven (7) years of service.
- For safety employees - You are eligible to elect this special catch-up provision in the year you reach age 47 if you have seven (7) years of service.
- Please note that these are the earliest times you may elect catch-up; you may always choose a later date to begin catch-up.
Note that you may not use the age 50+ provision and the 457 special catch-up provision during the same calendar year. You must choose whichever is greater.
For additional information on the 457 catch-up provisions or the annual contribution limits, please view a brochure on 457 contribution limitations.
Timing of Distribution
Distributions are allowed only upon the following triggering events:
- severance from employment;
- attainment of age 70½ (whether or not still employed);
- death; or
- the occurrence of an approved unforeseen emergency hardship.
The Plan also includes a provision allowing the in-service distribution of accounts that do not exceed $5,000 if: 1) you have not made any contributions to the Plan during the prior two years; and 2) you have not received this type of in-service distribution in the past.
The IRS requires that distributions under a 457 plan begin no later than the April 1st of the calendar year following the calendar year in which you attain age 70½ or retire, whichever occurs later. If you fail to receive the minimum required distribution for any tax year, a 50% excise tax is imposed on the required amount that was not timely distributed. These rules are referred to as IRS minimum required distribution requirements (MRD).
When you are entitled to a distribution of benefits under the Plan, you can choose from any (or a combination) of the payment options described below:
Periodic payments of your account (for account balances of at least $5,000)
- Specified Period - not less than 3 years and no more than your life expectancy.
- Specified Amount - cannot be less than $250 per payment and no more than 33 1/3% of your account.
Lump sum or partial lump sum distribution:Take all or a portion of your account balance in cash.
Annuity options: Choose from a variety of annuity options including a joint and survivor annuity, life annuity and life annuity with period certain.
Rollover into another eligible plan
- Your distribution can be rolled over into a 401(a), 401(k) 403(b) or other governmental 457 plans and traditional Individual Retirement Accounts (IRAs).
Please note that with respect to amounts rolled over into a non-457(b) eligible retirement plan, any subsequent distributions to the participant from the non-457(b) plan will be subject to an IRS 10% premature distribution penalty tax on the taxable portion if distributed prior to 59 ½, unless an exemption applies.
- All distributions are eligible for rollover except for: 1) amounts distributed for an unforeseeable emergency hardship withdrawal; 2) IRS minimum required distributions payable on or after you attain age 70 1/2; and 3) periodic payments made over your life or a specified period of 10 years or more.
Postpone any decision on benefit payments until a later date
To select a distribution under the Plan, you will need to initiate it online or call Customer Service at (800) 584-6001 for further assistance.
Divorce and Domestic Relations Matters
In the event a court issues a Qualified Domestic Relations Order (QDRO), your account will be split and payments will be made, as specified in the QDRO. In the event the QDRO identifies the alternate payee as your former spouse (“spousal alternate payee”), he or she is entitled to elect immediate distribution of the amounts awarded under the QDRO. A spousal alternate payee is also eligible to rollover amounts awarded to another eligible retirement plan in which he or she participates.
In the event of divorce, please contact Customer Service at (800) 584-6001 to request a Domestic Relations Order (DRO) information package.
Distributions for Health and Long-Term Care Insurance Premiums
The Plan allows certain eligible retired public safety officers the opportunity to directly transfer up to $3,000 annually tax-free for direct payment of qualified health insurance premiums (accident, health insurance or long-term care). Annual limit is an aggregate on distributions from all plan types maintained by the employer. To find out if you are eligible for this plan benefit, call your Voya local representative or Customer Service at (800) 584-6001. The Voya family of companies do not offer tax or legal advice. Your should consult with your own tax or legal advisor.
Upon your death, benefits would be payable to the beneficiary(ies) that you designated under the Plan. If you have not designated a beneficiary, or no beneficiary survives you, payment of death benefits will be made to your surviving spouse if married at the time of death or, if not, your estate.
Under the Plan, if you are married, your spouse must be your sole primary beneficiary unless your spouse consents in writing to your naming of an alternate beneficiary.
Your beneficiary will be entitled to select from a variety of payment options, which are generally the same options that would have been available to you. Your beneficiary must notify Voya of your death and make a payment election in accordance with the Plan.
You can verify who your beneficiary is on record or to make changes to your beneficiary information online. Simply Log In to your online account.
Your beneficiary will need to call Customer Service at (800) 584-6001 for a Death Benefit Withdrawal Request Form.
All of the payments you receive from the Plan are subject to Federal and state income taxes.
Federal income tax withholding will apply to your payments, as described below, based on whether you were eligible to rollover the distribution.
- If you receive a distribution that was eligible to be rolled over, a mandatory 20% will be withheld for federal tax purposes at the time of payment.
- If you receive a distribution that was not eligible to be rolled over, 10% will be withheld for federal tax purposes at the time of payment. However, you may elect to have no tax withheld.
Amounts distributed from a 457 plan are not subject to the IRS 10% premature distribution penalty tax if distributed prior to attaining age 59½. However, if you have previously rolled over amounts from a plan other than a governmental 457 plan, such rollover amounts will be subject to this 10% premature distribution penalty tax if distributed prior to attaining age 59½, unless an IRS exception applies. IRS exceptions include payments made:
- upon your severance from employment/retirement on or after you attain age 55;
- in substantially equal amounts over your life/life expectancy;
- as a result of your total and permanent disability;
- to your former spouse as an alternate payee under a QDRO; or
- to your beneficiary as a result of your death.
The Voya family of companies do not offer tax or legal advice. Your should consult with your own tax or legal advisor.
Unforeseen Emergency Hardship Withdrawals
IRC Section 457(b) defines an unforeseeable emergency as a severe financial hardship to the participant or the participant’s beneficiary (collectively referred to as the “account holder”) resulting from:
Even if the account holder meets the above requirements, this does not mean that he/she will be able to withdraw funds from the Plan. Withdrawals are permitted only to the extent the hardship cannot be relieved: (1) through reimbursement or compensation by insurance or otherwise; (2) by liquidating your assets (to the extent this would not itself cause severe financial hardship); or 3) by stopping deferrals under the Plan. Also, participants will not be allowed request an unforeseeable emergency once a distribution has begun.
Situations that may constitute unforeseeable circumstances include:
- An illness or accident involving you, your beneficiary, the spouse of you or your beneficiary or a dependent (as defined by the IRS) of you or your beneficiary;
- The loss of your or your beneficiary’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by homeowner’s insurance, such as a result of a natural disaster); or
- Other similar extraordinary and unforeseeable circumstances arising as a result of events beyond your or your beneficiary’s control.
- The imminent foreclosure of or eviction from the participant’s or beneficiary’s primary residence.
- The need to pay for medical expenses, including non-refundable deductibles, as well as the cost of prescription drug medication.
- The need to pay for the funeral expenses of a spouse or dependent (as defined by the IRS).
Only the amount reasonably necessary to meet the emergency need is available for withdrawal. Click here for more information.
Transfers for the Purchase of Service Credits
With County written approval, a participant may request a direct transfer of all or a portion of his deferred compensation account to a governmental defined benefit plan maintained by an employer within the State of California or federal military for the purchase of permissible service credit. If you wish to purchase prior service credit through the San Bernardino County Employees Retirement Association (SBCERA) please follow the steps outlined below:
- Contact Employee Benefits and Services at (909) 387-5831. They will calculate the exact period of time available for purchase.
- Contact SBCERA to determine the cost of the purchase. They will provide you with a letter and the forms you need to complete the transfer with Voya.
- Call the Service Center at (800) 584-6001 to request a Withdrawal and Transfer Request for Purchase of Governmental Defined Benefit Service Credit.
- After you have received the letter from SBCERA and completed all the required forms, submit them directly to the County of San Bernardino Employee Benefits and Services Division for processing and the Employee Benefits and Services Division will forward them to Voya for processing.
If you wish to purchase prior service from another California governmental defined benefit plan or the Federal military you will need to call the Service Center at (800) 584-6001 to request a Withdrawal and Transfer Request for Purchase of Governmental Defined Benefit Plan Service Credit.
Loans are available according to the following guidelines.
- An active participant is permitted to have one general purpose loan and one residential loan (used to acquire, construct, reconstruct or substantially rehabilitate the principal residence of the participant or family member) outstanding under the Plan at any time.
- Minimum loan amount for general purpose loans is $1,000, and for residential loans is $5,000.
- The maximum loan amount for the aggregate of all loans under all County Plans is the lesser of: 1) $50,000 minus the excess (if any) of the highest outstanding balance of loans during the one year period ending on the day before the loan is taken, over the outstanding balance of loans on the date the loan is taken; or 2) 50% of your vested account balance.
- Loan repayments (principal and interest) are made by payroll deduction on a biweekly basis.
- The maximum loan repayment period is five (5) years for general purpose loans and 20 years for residential loans.
- A one-time set up fee of $100 applies to each loan taken.
- In the event of a loan default, the participant is not permitted to initiate another loan until the defaulted loan is repaid.
- Married participants must obtain spousal consent in order to take a loan.
To request a loan, please call Customer Service at (800) 584-6001 for a Loan Request package.
Loans may impact your withdrawal value and limit participation in future growth potential.
Not FDIC/NCUA/NCUSIF Insured | Not a Deposit of a Bank/Credit Union | May Lose Value | Not Bank/Credit Union Guaranteed | Not Insured by Any Federal Government Agency
Insurance products issued by Voya Retirement Insurance and Annuity Company, One Orange Way, Windsor, CT 06095-4774. Securities are distributed by Voya Financial Partners LLC (member SIPC). Custodial account agreements or trust agreements are provided by Voya Institutional Trust Company. Insurance obligations are the responsibility of each individual company. All companies are members of the Voya® family of companies. Securities may also be distributed through other broker-dealers with which Voya has selling agreements. Product and services may not be available in all states. CN-1214-10893-0117