The Plan is established under Internal Revenue Code Section 457. Under the Plan, you postpone receiving (defer) a portion of your salary.
You decide, within certain legal limits, how much of your income you want to defer.
- The County (your employer) reduces your paycheck before income tax by that amount and forwards it to Voya Financial® on a regular basis.
- Contributions are invested in the investment options you have selected.
- The contributions and any earnings that accumulate are not taxed until they are distributed to you. This is usually at retirement when you may be in a lower tax bracket.
The Plan is a voluntary plan and available to the following employees of the County:
- Permanent represented employees;
- Permanent non-represented employees;
- Any eligible employee may elect to participate in the Plan and defer a specified dollar amount or percentage of future compensation. To participate, you must defer a minimum of 1% of your compensation.
Under the Plan, the maximum annual contribution amount is set by Internal Revenue Service (IRS) guidelines on a yearly basis. You may view the current limits here.
You may be eligible for increased contributions:
- Add up to $5,500 in annual Plan contributions on and after you attain age 50 under an age 50+ catch-up provision.
- During the three consecutive years prior to attaining Normal Retirement Age under a special catch-up provision.
(For additional information on the 457 catch-up provision or the increased contribution limits for participants age 50 and older, please refer to the How Much Can I Contribute? brochure.)
Note: You may not use the Age 50+ provision and the 457 Special Catch-up provision during the same calendar year.
Timing of Distributions
Distributions are allowed only upon severance from employment, death, or the occurrence of an unforeseeable emergency, which are considered triggering events. The Plan also includes a provision allowing the in-service distribution of accounts that do not exceed $5,000 if:
- You have not contributed to the Plan during the prior two years; and
- 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% excise tax is imposed on the required amount that was not timely distributed. These rules are referred to as IRS minimum required distribution requirements (MRD).
When you are eligible to receive a distribution under the Plan, you have a variety of payout options. These payout options include:
Systematic withdrawal of your account
- Specified Period — not less than 3 years and no more than 30 years.
- Specified Amount — cannot be more than 20% of your account.
- Payments can be monthly, quarterly, semi-annually or annually.
Deferral of all or a portion of your benefits to a later date
- The latest date to which you can defer payments is the April 1st of the year following the year you reach age 70½, or April 1st of the year following the year you retire, whichever is later.
Lump sum or partial lump sum distribution in combination with other options
- Take all or a portion of your account balance in cash.
Rollover into Another Eligible Plan
- Your distribution can be rolled over into a 401(a), 401(k), 403(b), other governmental 457 plan, or a traditional IRA, if available and roll-overs are permitted.
All distributions are eligible for rollover except for:
- An unforeseeable emergency withdrawal;
- IRS minimum required distributions payable on or after you attain age 70½; and
- Periodic payments made over your life or a specified period of 10 years or more.
All of the payments you receive from the Plan are subject to federal and state (if applicable) income taxes.
Federal income tax withholding will apply to your payments, as described below, based on whether you were eligible to rollover the distribution.
If you receive a distribution that was eligible to be rolled over, a mandatory 20% is withheld for federal tax purposes at the time of payment.
If you receive a distribution that was not eligible to be rolled over, 10% federal tax is withheld at the time of payment. However, you may elect to have no withholding withheld.
Amounts distributed from a 457(b) plan are not subject to the 10% premature distribution penalty tax if distributed prior to attaining age 59 ½ . However, if you have previously rolled over amounts from a plan (including a traditional IRA) other than a government 457 plan, such rollover amounts will be subject to this 10% premature distribution penalty tax if distributed prior to attaining age 59 ½ , unless an IRS exception applies.
Voya® does not offer legal or tax advice. Please seek the advice of your own legal or tax advisor prior to making a tax-related investment decision.
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. You can log into your account to change your beneficiary.
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” section of this website). Your beneficiary must notify Voya of your death and make a payment election in accordance with the Plan. A non-spouse beneficiary is permitted to make a direct rollover of death benefits to an inherited IRA.
Unforeseeable Emergency Withdrawals
IRS guidelines and the plan document define an unforeseeable emergency as a severe financial hardship to the participant or beneficiary resulting from:
- An illness or accident involving you, your beneficiary, the spouse of you or your beneficiary or a dependent (as defined by the IRS*) of you or your beneficiary;
- The loss of your or your beneficiary’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by homeowner's insurance, such as a result of a natural disaster); or
Other similar extraordinary and unforeseeable circumstances arising as result of events beyond your or your beneficiary’s control. 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:
- Through reimbursement or compensation by insurance or otherwise;
- By liquidating your assets (to the extent this would not itself cause severe financial hardship);
- By borrowing from commercial sources to the extent that this borrowing would not itself cause severe financial hardship; or
- By stopping deferrals under the Plan.
Only the amount necessary to meet the emergency need is available for withdrawal. Note that the emergency event must have occurred within 12 months prior to the application date for a withdrawal. Once your request is approved, you will be required to stop deferrals to the Plan for one year.
If you are considering applying for an Unforeseen Emergency withdrawal, please contact Voya’s local Portland office for assistance at (503) 937-0378 or toll-free at (800) 238-6281. Office hours are 8:30 a.m. through 5:00 p.m. (PST).
Insurance products, annuities and retirement plan funding issued by (third party administrative services may also be provided by) Voya Retirement Insurance and Annuity Company, One Orange Way, Windsor, CT 06095-4774. Securities are distributed by Voya Financial Partners LLC (member SIPC). All companies are members of the Voya® family of companies. Securities may also be distributed through other broker-dealers with which Voya has selling agreements. Insurance obligations are the responsibility of each individual company. Product and services may not be available in all states.