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Our objective is to make life easy for all retirement plan stakeholders. We do our best to thoroughly explain the features and benefits of our smart retirement solutions. Sometimes, you may still have a question. Click on these Frequently Asked Questions (FAQs) to get the information you need to understand why smart retirement solutions are best in class. 

  • What is Net Asset Value?
    The net asset value, or NAV, is the price at which you buy or sell shares of a mutual fund. To determine the NAV, a mutual fund computes the value of its assets daily by adding up the market value of all the securities it owns, subtracting all liabilities, and then dividing the balance by the number of shares the fund has outstanding. Mutual funds are required to use forward pricing, which means that the price you pay is the next NAV set for the fund after your order is received. The NAV you see in the newspaper is the NAV from the previous day.
  • What is a 457 plan?
    A 457 plan is a non-qualified tax-deferred compensation plan that works very much like other retirement plans, such as the 403(b) and 401(k). Created in 1978, the name refers to the relevant section [457] of the Internal Revenue Code that governs the plan.
  • How does a 457 plan work?
    Employees set aside money for retirement on a pre-tax basis through a salary deferral agreement with their employer. Under this arrangement, the employee agrees to take a reduction in salary. The money reduced is directed to an investment company offered by the employer. The 457 contributions grow tax free until withdrawal at retirement.
  • Is an employer required to have a plan document?
    Yes, the employer must create a plan document detailing the specific rules of the 457 plan.
  • Are there any other advantages for the employer?
    Yes, a 457 does not require a Form 5500, compliance testing, or delivery of a Summary Plan Description (SPD).
  • Who can establish a Governmental 457 plan?
    This type of plan is available to state or local governments and their agencies.
  • How do 457 plans work?
    Employers or employees through salary reductions contribute up to the IRC 402(g) limit ($17,500 in 2013) on behalf of participants under the plan.
  • Who is eligible to contribute to a Governmental 457 plan?
    The employer will decide eligibility because unlike the 403(b) plan, there is no universal accessibility under the 457. This means that employers are not required to make the plan available to all employees. 457 plans can allow independent contractors to participate, unlike 401(k) and 403(b) plans.
  • Can I take a loan out against my Governmental 457 account?
    457 plans may permit loans at the discretion of the plan sponsor. To determine if a plan offers loans, check with the employer, plan sponsor or plan administrator.
  • Why contribute to a 457 plan?
    - Reduce taxable income - Save for retirement - Contributions and earnings grow tax-deferred - Ability to contribute to a 403(b) or a 401(k), if offered by employer
  • How much can be contributed to a 457 plan?
    For 2013, workers are able to contribute the lesser of: - The IRC 402(g) employee elective deferral limit of $17,500, or - Up to 100% of includable compensation (must be less than the elective deferral limit). Clients age 50 and over may contribute an additional $5,500. Employers are not required to offer this provision. One major difference between a 457 and a 403(b) is that in the 457, the $17,500 contribution limit is inclusive of both the employee and employer contributions.
  • Can I take a withdrawal from a 457 account?
    Generally, funds may be withdrawn in the case of “extreme financial hardship” or in the event of an “unforeseeable emergency.” This right is subject to the employer’s plan rules specified in the plan document. An advantage to the 457 plan is that it is not subject to the age 59 1/2 withdrawal rule; therefore, there is no early withdrawal penalty at retirement or upon termination of employment.
  • Do I have to take a distribution from my 457 account?
    Required Minimum Distributions (RMD) must start by April 1 of the year following the year in which you reach age 70 1/2.
  • Can I make Roth contributions to my 457 account?
    457 governmental plans are now permitted to add the Roth option to their plan, effective January 1, 2011.
  • What are my options if I change jobs?
    An employee’s options when switching jobs are: - 457 money can be moved into the new employer’s 457, 403(b) or 401(k) if the plan accepts such transfers, or into a Rollover IRA - Public (governmental) plan 457 money is not subject to the age 59 1/2 withdrawal restriction, so money can be withdrawn (subject to income tax on the full amount) without incurring a 10% early withdrawal penalty - Leave the money where it is, if the plan allows Please note that if you roll governmental 457 money into a 403(b), 401(k), IRA or any other plan (other than a 457 plan), you will lose the benefit of taking premature withdrawals without penalty. Conversely, if you roll 403(b) money into a 457 plan you do not avoid the 10% early withdrawal penalty. The plan provider or sponsor is required to account for this money separately.
  • Why should I name a beneficiary?
    This allows you to control who receives the value of your retirement account should you die.

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