A 457(b) pre-tax plan is a governmental deferred compensation plan that allows participants to make tax-deferred contributions each pay period, which are then invested and potentially grow usually until retirement. The Kentucky Public Employees’ Deferred Compensation Authority (KDC) 457(b) Deferred Compensation Plan allows State employees to get the same benefit, through a program that is specifically tailored to the needs of Kentucky public employees.
The money is not taxed until it is withdrawn – usually in retirement, when you may be in a lower tax bracket. See the plan comparison chart (PDF) for full details.
Remember, investing involves market risk, including the possible loss of the money you have saved. As you get started in the plan, we will help you understand market risk and strategies that may help you deal with it.
Additional 457(b) features
In addition to tax-deferred investing, the 457(b) plan also offers these features, and more:
- Contributions to more than one plan at a time – you may contribute to a 457(b) while also contributing to a 401(k) and/or a 403(b) Plan (if you work for a State educational institution), as long as you do not exceed the current IRS contribution limits. See the plan comparison chart (PDF) for details.
- Catch-up contributions – you can take advantage of your remaining years of earning income with two special provisions designed to help participants nearing retirement invest even more. Catch-up contributions in Learning Center allow eligible participants to contribute more than the normal annual deferral limits and there are two kinds are available – Age 50+ Catch-up and Special 457 Catch-up. Both options are tax deferred until withdrawal when they are taxed as ordinary income. Only one of the catch-up options can be utilized per plan each year.
- Age 50+ Catch-up – if you will be age 50 or older by the end of the tax year, you use this option and defer up to an additional $5,500 over the normal deferral limit.
- Special 457 Catch-up – if you are within the three years prior to your designated Normal Retirement Age,* you may be eligible for catch-up contributions up to two times the maximum contribution limit to make up for under contributing in the past.
- Transfers – you can transfer money into your 457(b) plan from another 457(b) plan, however, there are important criteria to consider. Also, upon leaving State employment, you can transfer your money into another qualified retirement plan. See the plan comparison chart (PDF) for more information.
- Unforeseeable emergency withdrawals – you may take an unforeseeable emergency withdrawal from your plan account, as long as certain qualifications are met.
- Loans – as long as certain qualifications are met, you may be eligible for a loan. You are obligated to pay it back, with interest.
For a complete look at all of the KDC 457(b) plan features, benefits and restrictions take a look at the plan comparison chart (PDF).
Qualified retirement plans, deferred compensation plans and individual retirement accounts are all different, including fees and when you can access funds.
Neither Nationwide® nor any of its representatives give legal or tax advice. Please contact your legal or tax advisor for such advice.
Get the help you need
Talk to one of our local Plan Service Representatives if you have questions about plan options.