Section 457 Deferred Compensation Plans

457 Documents


  • Multiple Investment Options
    • The Star Select group variable annuity provides 19 different investment options to take advantage of changing investment-market conditions, including American Funds, Fidelity, Russell Funds, PIMCO, T. Rowe Price, Alger Management, Janus, Calvert and AUL.
    • AUL Fixed Interest Account and OneAmerica Money Market are also available.

    No Front-End Sales Charge

    There are no sales charges taken from contributions. This means that 100% of all contributions are invested and start working for participants. 

    No Deferred Sales Charge for Benefit Responsive Events at Participant Level

    A charge will not be assessed when participants make withdrawals because of:

    • Retirement
    • Disability
    • Death
    • Severance from employment
    • Unforeseen emergency withdrawals (as defined by the plan document)
    No Annual or Quarterly Administration Charge
    NO 10% IRS Penalty for withdrawals prior to age 59 ½
    Client Friendly Technology & Communication
    • Quarterly participant statement
    • Toll-free number for daily account balance or transfers
    • Interactive website -
    • Personalized benefit projection

Section 457 Deferred Compensation Plan - Questions and Answers

    1. What are unique advantages of a Deferred Compensation Plan?

    At early retirement or separation of service from your employer, distribution of the plan can be made to you without the 10% IRS penalty tax usually associated with early distribution from other retirement plans, such as IRA’s, 403(b) annuities or 401(k) plans. 

    Since Deferred Compensation Plans are owned and sponsored by your employer for the sole benefit of employees and their beneficiaries, until you retire or separate from service, these plans are generally not subject to garnishment, attachment or divorce claims that could be imposed upon a district employee during their working years. 

    You may select from a variety of investment options for the Deferred Compensation Plans. 

    1. What is deferred compensation?

    Deferred compensation is a voluntary salary reduction plan allowing eligible employees to defer current taxable income during peak earning years and accumulate funds for retirement savings. 

    These funds are set aside for you as "before tax" dollars reducing your current income tax liability and provides, through payroll deduction, the easiest way to accumulate savings for the future. Earnings on these funds are also tax deferred. 

    1. How are contributions made?

    You decide how much of your compensation you want your employer to contribute into the plan on your behalf, within limits established by the federal government. All contributions are tax deferred.

    1. Will there be a deferred sales charge applied to a withdrawal of my account?

    No, there will never be a deferred sales charge assessed against withdrawals due to:

      • Death
      • Disability
      • Retirement
      • Severance from employment
      • Unforeseen emergency withdrawals (as defined by the plan document)
    1. Are there any limits to how much I can defer each tax year?
    For 2015, you may defer from your wages, a maximum of $18,000 to all 403(b) and 457(b) plans unless you will reach 50 years of age during the year. In that case, you would be eligible to contribute an additional $6,000. Deferrals may not exceed 100% of your wages. 
    1. I am contributing $6,000 into my 403(b). Can I participate in the Deferred Compensation Plan?

    Yes, as long as your income permits, you may contribute up to the maximum in each plan.

    1. I am putting $2,400 a year into a 403(b) tax deferred annuity and my salary is $35,000 per year. How much can I defer under the 457 Deferred Compensation Plan?

    You may contribute up to the allowable maximum of $15,500. There is no reduction for any amount contributed to a 403(b).

    1. How often can I make changes once I have started contribution to the plan?

    You may increase, decrease, stop or re-start your deferrals as allowed by your employer.

    1. When are Deferred Compensation funds available from the plan?

    Distribution could be made based on the following events:

      • Death
      • Disability
      • Approved unforeseen emergency
      • Retirement
      • Separation from services
    1. May I take the funds without the 10% penalty tax usually associated with an IRA, 403(b) annuity or 401(k) pension plan distribution before age 59½?

    There will never be a 10% penalty tax on your Deferred Compensation distribution.

    1. What are the payout options when I take a distribution from the plan?

    You can elect from the following:

    • Single lump sum of the entire account balance
    • Installment payment over a selected fixed period
    • Installment payments guaranteed for your lifetime or your and your spouse’s lifetime
    • If you elect early retirement, payout can be deferred until age 70½
    • Account may be transferred to another retirement plan at your new employer or to an IRA
    1. What happens to my account upon my death?

      If you already started receiving periodic payments, any remaining guaranteed payments will be made to your beneficiary at least as rapidly as the method in effect at your death.

    If you die before receiving any payments and your named beneficiary is your spouse, your spouse may choose to receive the money at a future date (not beyond age 70½) or any one of the same payout options shown in Question 11.

    If your named beneficiary is not your spouse, two options are available:

    • Select a single lump sum of the entire account balance.
    • Select a payment option up to but not exceeding 15 years.
    1. How often do I receive information on my Deferred Compensation Plan balances?

    Quarterly statements of accounts will be provided showing the value of your account as of the end of each quarter. Daily account valuations are also available online.

    1. How do I enroll?

    Make an appointment with a representative of the district’s program administrator (First Financial Administrators, Inc.).

    1. Can I choose where the money is invested?

    Yes, you may invest in any of the 19 investment options in your employer sponsored plan.

    1. How do I get more information?

    Contact First Financial Securities of America at 800-523-8422 or the district’s Human Resources Office at 817-408-4185.