A 457(b) deferred compensation plan is a retirement plan offered by your employer, created to allow public employees like you to put aside money from each paycheck toward retirement. A deferred comp plan can help bridge the gap between what you have in your pension and Social Security, and how much you'll need in retirement. We also allow you to designate Roth contributions to the 457(b) plan.
You can also get information about Trust Committee meetings or reach out to City of Seattle Plan Management.
Here are some frequently asked questions about deferred comp plans:
- What sets a 457(b) apart from other retirement plans? Once you stop working for the City, you may take a withdrawal of your pre-tax deferrals without an additional 10% early withdrawal tax. A 457(b) may offer benefits other retirement plans can't, like penalty-free withdrawals once you stop working for your public sector employer.
- What does tax-deferred mean? Also referred to as "pre-tax," it means you don't pay income taxes on your pre-tax deferred comp plan contributions or earnings until you retire and/or begin to take payments from your account. This may lower your taxable income now and in retirement. Withdrawals taken in retirement are generally subject to ordinary income taxes.
- How much can I put into a 457(b) plan? Check out the current contribution limits
- Can I combine retirement accounts? Our Education Consultants may work with you to combine or consolidate your eligible retirement accounts into your deferred comp account. This may make managing your retirement investments a little easier.
Qualified retirement plans, deferred compensation plans and individual retirement accounts are all different, including fees and when you can access funds. Assets rolled over from your account(s) may be subject to surrender charges, other fees and/or an additional 10% early withdrawal tax if withdrawn before age 59½.