The following reflect some of the more commonly asked questions regarding the 457(b) Deferred Compensation Plan. We hope this quick reference is helpful.
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What is a 457(b) Deferred Compensation Plan?
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Can I contribute to both the 403(b) Supplemental Retirement Plan (SRP) and the 457(b) Deferred Compensation Plan?
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Will enrolling in the 457(b) Plan affect the University match on my Base Retirement Plan (BRP)?
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Is there a University contribution to the 457(b) Plan?
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What investment options are available?
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How will I enroll?
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I already have a 403(b) SRP with the investment sponsor that I will use for my 457(b) Plan. Do I need a new application?
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May I enroll in the 457(b) Plan at anytime?
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How much can I contribute or defer to the 457(b) Plan?
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Will the 457(b) Plan provide any catch-up provisions for employees?
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How often can I make a change to the 457(b) Plan?
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When can I take a distribution from my 457(b) account?
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Will MSU allow loans against the 457(b) Plan?
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What happens to my 457(b) account if I leave MSU?
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May I rollover my 457(b) account if I go to a different employer?
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When do I pay income taxes?
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If I take a distribution from my 457(b) account prior to age 59 ½, due to an unforeseeable emergency, is there a penalty?
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What affect does enrolling in the 457(b) Plan have on my Social Security?
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| What is a 457(b) Deferred Compensation Plan?
This is a non-qualified tax-deferred compensation plan that allows you to increase your savings toward retirement. You determine the pre-tax amount that you want to defer (up to the IRS maximum) and how it is to be invested. Assets are held in one or more group annuity contracts for the exclusive benefit of you and your beneficiaries.
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| Can I contribute to both the 403(b) Supplemental Retirement Plan (SRP) and the 457(b) Deferred Compensation Plan?
Yes. The plans have separate enrollment, both are voluntary (optional), and you may participate in either one or both plans.
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| Will enrolling in the 457(b) Plan affect the University match on my Base Retirement Plan (BRP)?
No.
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| Is there a University contribution to the 457(b) Plan?
No. Similar to the 403(b) SRP, the 457(b) Plan is designed for employee contributions only.
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| What investment options are available?
Three investment sponsors are presently available: AIG VALIC, AXA Advisors/Equitable, and TIAA-CREF. You should contact the investment sponsor of your choice regarding the funds that are offered for the 457(b) Plan.
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| How will I enroll?
You must complete an account application for an investment sponsor first and receive a confirmation number in order to complete your Retirement Online Enrollment at MSU.
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- To complete an account application for TIAA-CREF you must login to eHR with your MSU NetID and password.
- To complete an account application for AIG VALIC or AXA Advisors/Equitable please contact your investment sponsor to set up an appointment with a representative.
Upon completion of the account application you will receive a MSU Confirmation Number. With this confirmation number you may now complete your MSU salary deferral at Retirement Online Enrollment\Changes. |
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| I already have a 403(b) SRP with the investment sponsor that I will use for my 457(b) Plan. Do I need a new application?
Yes. The 457(b) Plan will be a new account and you will need to complete a new application. Applications can be obtained by contacting the 457(b) investment sponsor of your choice. |
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| May I enroll in the 457(b) Plan at anytime?
Yes. Enrollment is always effective the month following acceptance of your online salary deferral.
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| How much can I contribute or defer to the 457(b) Plan?
You may contribute up to the maximum as defined by the Internal Revenue Code (IRC). The maximum is determined each calendar year. You may obtain your maximum by contacting MSU Human Resources Benefits at (517) 353-4434 ext. 0 or email benefitsinfo@hr.msu.edu.
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| Will the 457(b) Plan provide any catch-up provisions for employees?
Yes. If you are over the age of 50 you may contribute an additional amount, in accordance with the law. If you are between the ages of 62 and 65 you may also be eligible for additional catch-up provisions. Contact MSU Human Resources Benefits for additional information at 517-353-4434, 800-353-4434 ext. 0 or benefitsinfo@hr.msu.edu.
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| How often can I make a change to the 457(b) Plan?
You may submit an online salary deferral change as often as once a month. You may change your deferral amount, investment sponsor selection, or cancel your contributions.
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| When can I take a distribution from my 457(b) account?
Distributions are only available at separation from service, for an unforeseeable emergency or at death. The criteria for an unforeseeable emergency is defined differently than the criteria for hardship under the 403(b) SRP. For definitions of hardship and unforeseeable emergency refer to the MSU Retirement Plan Comparison Chart.
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| Will MSU allow loans against the 457(b) Plan?
Yes. MSU will allow loans from the plan but not all investment sponsors offer this option. Please check directly with the investment sponsor you select regarding availability, payment schedules, interest rates and criteria.
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| What happens to my 457(b) account if I leave MSU?
Your account is always fully and immediately vested. You will have several distribution options to choose from. You will need to contact your investment sponsor for information and the proper forms.
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| May I rollover my 457(b) account if I go to a different employer?
Yes, if your new employer accepts rollovers. If your new employer does not offer a 457(b) plan, rollovers into other types of plans (i.e. 403(b), 401(k), or IRA) are permitted. If you are considering a rollover to a non-457(b) program, consult your tax advisor concerning early withdrawal penalties.
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| When do I pay income taxes?
The 457(b) Plan is funded through pre-tax contributions, so applicable federal and state taxes are not due until funds are withdrawn from the account.
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| If I take a distribution from my 457(b) account prior to age 59 ½, due to an unforeseeable emergency, is there a penalty?
No. The 457(b) Plan is not subject to a 10% early withdrawal penalty, regardless of your age.
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| What affect does enrolling in the 457(b) Plan have on my Social Security?
Enrollment in the 457(b) Plan does not reduce your current Social Security taxes or your future Social Security benefits. This is also true for the 403(b) Plan. |