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457(b) Plans

457(b) Plans in Waterbury, CT

A non-qualified, deferred compensation plan established by state and local governments and tax-exempt employers under IRC Section 501. They can be either eligible plans under IRC 457(b) or ineligible plans under IRC 457(f). The Pension Service handles only eligible 457(b) plans.

The Pension Service handles only eligible 457(b) plans.

Nonqualified Deferred Compensation For Employers in Waterbury, CT What is it?

  • Nonqualified Employer Retirement Savings Plan that does not meet the tax and labor law (ERISA) requirements for qualified pension plans.
  • Used to provide retirement benefits to a select group of executives or key personnel or to provide supplemental benefits beyond those provided by company’s qualified plan
  • 457(b) plans are for tax exempt organizations or governmental agencys
  • 457(b) plans can include employee deferrals, employer match and employer non-elective contributions.  Combined these contributions are subject to the annual contribution limit of $19,500 for 2021.

Advantages?

  • Involves minimal IRS, ERISA and other regulatory requirements such as reporting & disclosure, fiduciary funding requirements, etc.
  • More plan design flexibility than qualified plans.
  • Allows coverage for a group of employees or even a single employee without any non-discrimination requirements.
  • Allows Employer to provide different benefit amounts for different employees on different terms & conditions.
  • Restores contributions/benefits limited by IRS restrictions in qualified retirement plans.
  • Employee can defer max amount($19,500 for 2021) to 457(b) and max to 401(k)/403(b)
    • This is an attractive feature for those key employees really looking to maximize their retirement savings.

Disadvantages?

  • Tax exempt 457(b) plan must restrict eligibility to a select group of executives or key personnel.
  • For 457(b) plans the annual deferral limit ($19,500 for 2020) includes employee deferrals, employer match and employer non-elective contributions. This could become an issue if the employer is making a significant employer contribution to the plan.

Investment of Assets

  • Participants can elect how to invest the assets of the plan.(i.e. mutual funds, etc.)

Distribution Rules

457(b) Plans in Waterbury, CT

  • Withdrawals permitted after severance of employment and for unforseen emergencies
  • Must start receiving benefits by April 1 following later of retirement or age 72
  • Plan loans permitted

The Next Step

  • What is the Employer’s objective with the Retirement plan?
  • Whom do you want to benefit in the plan?
  • What level of benefit do you wish to provide?

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457(b) Plans Videos

SECURE Act - Setting Every Community Up for Retirement Enhancement.

Resources

401(k) and Retirement Plan Limits for the Tax Year 2024

401(k) and Retirement Plan Limits for the Tax Years 2018 through 2024.

Reviews

We look forward to working with TPS Group next year

We look forward to working with TPS Group next year

As another year ends, I want to express my sincere gratitude and appreciation to you and TPS Group for assigning us Krista Blier. Krista provides exceptional customer service and has been a major asset to me and Lynch, Traub, Keefe & Errante, P.C. She is extremely knowledgeable and always accessible. Always on top of the RMD’s, giving me an explanation on form 5500-SF to present to Mr. Keefe & keeping us updated with any account changes as well as specifics. It is a relief knowing I have full faith in Krista and can turn a blind eye to our account. I cannot tell you how many vendors/brokers I have to stay on top of and babysit to make sure our deadlines are met and to perform their job duties. Krista is a pleasure to work with and we look forward to working with her and TPS Group next year.

- Michael Panela

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