What is a 457 DCP?
A 457 deferred compensation plan allows you to save and invest money for retirement with tax benefits. The value of the account is based on the contributions made and the investment performance over time. A 457 plan is designed to supplement your retirement income.
What is a section 457 distribution?
Section 457 plans are nonqualified, unfunded deferred compensation plans established by state and local government and tax-exempt employers. An attendant feature of section 457 plans is that they may provide less security to participants than do qualified plans.
What is a 457 payment?
A 457(b) plan is an employer-sponsored, tax-deferred retirement savings vehicle available to some state and local government employees. It works like a 401(k) in that employees can divert a portion of their pay to their retirement account. This provides an immediate tax break by reducing participants’ taxable income.
Who qualifies for a 457?
The 457 plan is offered to those who work for the government, though some non-governmental (non-profit) employees may also be offered the plan. Employers provide the plan to employees who then contribute portions of their salary.
How does a DCP plan work?
Defined contribution plans take pre-tax dollars and allow them to grow in capital market investments on a tax-deferred basis. This means that income tax will ultimately be paid on withdrawals, but not until retirement age (a minimum of 59½ years old, with required minimum distributions (RMDs) starting at age 72).
Are 457 plans good?
There are certainly tax benefits associated with participating in a 457. This includes being able to contribute pre-tax money to decrease your overall tax burden. The gains also grow tax-free. It’s just as safe and provides many of the same benefits.
Is there a difference between 457 and 457 B?
There are two different types of 457 plans—the 457(b), which is offered to state and local government employees, and the 457(f) is for top executives in nonprofits. A 403(b) plan is typically offered to employees of private nonprofits and government workers, including public school employees.
What are DCP funds?
The Defined Contribution Plan (DCP) is a savings plan that allows participants to accumulate tax‐ sheltered money for retirement. Each pay period, 7.5% of salary will be deposited automatically in the Defined Contribution Plan and credited to an individual tax‐sheltered account.