Your Plan Highlights – Plan Overview
The Plan is established under Internal Revenue Code Section 457. Under the Plan, you postpone receiving (defer) a portion of your salary. It works like this:
The Plan is a voluntary plan available to all employees of the State of West Virginia and other political subdivisions. Additionally, new State employees hired after July 1, 2007, will be automatically enrolled into the Plan with a $10 deferral per pay period, unless you decline this in writing within 30 days of your date of employment.
There are no age or length of service requirements.
Contributions under the Plan are made by participants through a salary deferral.
Under the Plan, the maximum annual contribution amount is identified below (or 100% of includible compensation, if less):
Age |
2008 |
2009 |
Under 50 |
$15,500 |
$16,500 |
50 and older |
$20,500 |
$22,000 |
3 Years Prior to NRA |
$31,000 |
$33,000 |
Each fall, the IRS releases cost of living adjustments for the following year.
Catch up Provisions
You may be eligible for increased contributions under one of the following Plan provisions:
(For additional information on catch-up provisions, please refer to the brochure “457(b)-How Much Can I Contribute?” located in the library section of this Web site.)
Matching Contributions “For State Employees Only”
Beginning in September 2008, the State of West Virginia will contribute a matching contribution into a new Internal Revenue Code Section 401(a) retirement plan. To qualify an employee must have contributed at least $10 per pay period during the preceding fiscal year (July 1st– June 30th) into the 457 Deferred Compensation Plan. If you meet this qualification requirement, the State will match 25% of your deferral amount up to a maximum of $100 per year beginning in September 2008 for four (4) fiscal years (as funds are available).
Under this new Plan, you will have access to the same investment options, excluding the self directed brokerage account, as under the Deferred Compensation Plan.
More details will become available as September 2008 approaches.
Timing of Distributions
Distributions are allowed only upon severance from employment, death, or the occurrence of an unforeseeable emergency, which are considered to be triggering events. The Plan also includes a provision allowing the in-service distribution of accounts that do not exceed $5,000 if: 1) you have not made any contributions to the Plan during the prior two years; and 2) you have not received this type of in-service distribution in the past.
The IRS requires that distributions under a 457 plan begin no later than the April 1st of the calendar year following the calendar year in which you attain age 70½ or separate from service, whichever occurs later. If you fail to receive the minimum required distribution for any tax year, a 50% federal excise tax is imposed on the required amount that was not timely distributed. This is referred to as the IRS required minimum distribution (RMD) rule.
Payment Options
When you are entitled to a distribution of benefits under the Plan, you have the choice from a variety of payment options. These options are described in the “Payment Options” item on the left menu bar.
Death Benefits
Upon your death, benefits would be payable to the beneficiary(ies) that you designated under the Plan. If you have not designated a beneficiary, payment of death benefits will be made to your estate, in accordance with the Plan.
Your beneficiary will be entitled to select from a variety of payment options, which are generally the same options that would have been available to you (and are described in the “Payment Options” item on the left menu bar). Your beneficiary must notify ING of your death and make a payment election in accordance with the Plan. To update your beneficiary, please select and complete this form.
Taxation
All of the benefit payments you receive from the Plan are subject to federal and state income taxes when paid.
Federal income tax withholding will apply to your payments, as described below, based on whether you were eligible to rollover the distribution.
Amounts distributed from a 457 plan are not subject to the 10% federal premature distribution penalty tax if distributed prior to attaining age 59½. However, if you have previously rolled over amounts from a plan other than a governmental 457 plan, such rollover amounts will be subject to this 10% federal penalty tax if distributed prior to attaining age 59½, unless an IRS exception applies. IRS exceptions include payments made:
ING does not offer legal or tax advice. Consult with your tax and legal advisors regarding your individual situation.
Unforeseeable Emergency Withdrawals
IRS guidelines and the Plan document provide that an unforeseeable emergency means a severe financial hardship to the participant or beneficiary resulting from:
The purchase of a home, an auto or the need to pay a child’s college expenses, are not considered unforeseeable emergencies. In addition, withdrawals are permitted only to the extent the hardship cannot be relieved: (1) through reimbursement or compensation by insurance or otherwise; (2) by liquidating your assets (to the extent this would not itself cause severe financial hardship); (3) by borrowing from commercial sources to the extent that this borrowing would not itself cause severe financial hardship; or (4) by stopping deferrals under the Plan.
Only the amount necessary to meet the emergency need is available for withdrawal.
Click here for additional information on unforeseeable emergency withdrawals, including reasons that that do and do not qualify for a withdrawal.
If you feel you have incurred an unforeseen emergency, you should call the ING national Customer Service Center at 1-800-584-6001 to speak to a representative about emergency withdrawals. If it is determined that your request will meet the criteria, you may request the necessary forms be sent to you.
ING does not offer legal or tax advice. Consult with your tax and legal advisors regarding your individual situation.
Tax Free Distributions for Health & Long Term Care
Under the Pension Protection Act of 2006, up to $3,000 of otherwise federally taxable retirement plan benefits payable to an eligible retired or disabled public safety officer from the Plan may be excluded from income annually if amounts are paid directly to an insurer for qualified heal insurance premiums.
If you would like additional information, you should call the ING national Customer Service Center at 1-800-584-6001 to speak to a representative. If it is determined that you meet the eligibility criteria, you may request the necessary form be sent to you.
ING does not offer legal or tax advice. Consult with your tax and legal advisors regarding your individual situation.
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