Deferred Compensation 457(b) Plan
The City of Madison offers an optional Deferred Compensation 457(b) plan to permanent employees. The City does not make matching contributions toward the 457(b) plan. Because there is no defined enrollment period, eligible employees may enroll in the 457(b) plan at any time during employment with the City. The standard minimum contribution is $25.
Wisconsin State Retirement System annuities generally replace only a portion of your wages, so many employees use a Deferred Compensation plan to fill in the income gap. 457 plans are primarily set up for public employees, to replace private sector 401(k) plans.
Both Traditional and Roth 457 options are available to City employees. Traditional 457 plan contributions are deducted from your pay before taxes are collected. With a Traditional 457, contributions and earnings are taxed upon distribution from the account. Roth 457 plan contributions are deducted from your pay after taxes are collected. With a Roth 457, only earnings are taxed upon distribution from the account because the compensation deferred into the account was taxed before the contribution was made.
Employees have the opportunity to participate in the 457(b) plan with two separate plan administrators. One plan administrator is ICMA-RC and the other plan administrator is the Alliance Benefit Group (previously Lincoln Financial Advisors). Both plan administrators offer a variety of investment options for employees. To begin contributing to a 457(b) account, visit the ICMA-RC and/or Alliance Benefit Group pages to find the appropriate plan enrollment form and/or to find information on scheduling an appointment with a plan representative to discuss enrollment/investment options.
Withdrawals can only be made from your 457(b) account after separation from employment with the City of Madison, except in narrowly defined emergency situations (please see information below on emergency withdrawals).
Alliance Benefit Group & ICMA-RC Maximums
Both the Alliance Benefit Group and ICMA-RC have a maximum yearly contribution, which is regulated by Internal Revenue Code.
|Age||$ per year||$ per paycheck|
|if you are age 49 or under||$18,500||$711.54|
|if you turn age 50 or over in 2016||$24,500||$942.31|
|if you are using the Catch-Up Provision||$36,500||$1,403.85|
A provision in your deferred compensation plan allows withdrawals in the event of an unforeseeable emergency. This withdrawal is only permitted if a genuine emergency exists which can only be met by such a withdrawal. Emergency withdrawals are regulated by Internal Revenue Code. Learn more about Deferred Compensation Emergency Withdrawals.
For more information, please see the Employee Benefits Handbook.