Retirement & Investment Plans
Deferred Compensation 457 Plan
The State of Illinois 457 Plan (Plan) is a Section 457(b) supplemental deferred compensation plan that provides a tax-favored vehicle for participants to save for retirement.
Deferred Compensation 457 Plan in Brief:
- Participation is voluntary, and is in addition to your participation in the State Universities Retirement System (SURS).
- A flat dollar amount, of your choosing, is deducted from your paycheck on a pre-tax basis. An after-tax (Roth) contribution option will also be available beginning January 1, 2016. The amount of income that can be deferred is subject to IRS limitations.
- Federal and State taxes are deferred on your pre-tax contributions, and any associated earnings, until you withdraw funds. Roth contributions, in contrast, are included in your taxable income for both Federal and State tax purposes at the time of deferral.
- Distribution of pre-tax contributions and earnings are fully taxable for Federal tax purposes, but will not be subject to State of Illinois tax if taken in accordance with plan provisions, at full retirement age, and while a legal resident of Illinois. Distribution of Roth contributions and earnings are tax-free if taken upon attaining age 59 ½, death, or total disability, and at least five years have passed since your first contribution.
- Your participation in the Plan does not reduce any of your University benefits based on full salary such as retirement, life insurance, disability or survivor benefits.
- You may begin participation in the Plan at any time.
- Pre-tax and Roth (effective January 1, 2016) contributions may be made simultaneously.
- For further information on the taxation of 457(b) distributions, please visit the State Taxation of Retirement Income page.
To participate in the Plan, you must be an active employee and currently receiving compensation from the University. Contributions will be deducted from your paycheck while the Plan is effective. Note: You do not need to be eligible for insurance benefits to participate in this Plan.
Minimum Annual Contribution
The minimum contribution is $10 per pay period or $20 per month, whichever is greater. Your contribution is a flat dollar amount.
Maximum Annual Contribution
The maximum contribution limit is 100% of your net "includable compensation" or the annual limit set by the IRS, whichever is less. Includable compensation is defined as the employee's compensation minus any pre-tax contribution to a state sponsored retirement plan. Generally, employee contributions are limited to 80% of pay to allow for the usual payroll deductions. Exceptions may be made in certain circumstances. Benefits counselors in University Payroll and Benefits (UPB) are available to review employee deductions to make this determination.
Maximum contribution limits are established by the IRS each year. For current year information, refer to the CMS Deferred Compensation Plan web page.
In the State of Illinois Deferred Compensation 457 Plan, there are also two options for "catch-up" as you near retirement.
- Employees who are age 50 and over may make contributions with a higher annual limit.
- Employees may contribute twice the normal limit for any or all of the last three years prior to normal retirement age, subject to CMS approval.
Contact T. Rowe Price for catch-up provision details at 888-457-5770.
Contact CMS Deferred Compensation office or T. Rowe Price for questions about the plan or the funds offered.
CMS Deferred Compensation
800-442-1300 (Toll Free)
T. Rowe Price
888-457-5770 (Toll Free)
More Information and How to Enroll
This information is provided with the understanding that it is a source of information and does not constitute legal, tax, or other professional advice. If legal advice or other professional assistance is required, the services of a professional advisor should be sought.