457 Deferred Compensation Plan
The 457 Plan was approved by the ACC Board for employees effective in 2002.
The 457 Plan is a voluntary, pre-tax, self-managed, non-matching investment plan available to ACC employees for retirement and investment, etc. in addition to the mandatory State or required ACC retirement plans.
Employees can choose the 457 Plan, the 403(b) Plan or any combination of both plans up to the maximum annual pre-tax deductions allowable by law.
Please contact your selected vendor directly to establish a 457 Plan account (company application may be completed online, in person, or via 800 Customer Service). Once you have an account established you will need to enroll online through ACC Retirement Manager. Any future changes (of maximums, amounts or companies, etc.) require making your changes online through ACC Retirement Manager. Changing a company also requires establishing a new company account.
DISCLAIMER: Austin Community College assumes no responsibility for the future performance of any offered investment program. It is the employee's responsibility to select and monitor the performance of the company in the future. The employee is responsible for all tax liabilities incurred as a result of the management or dissolution of the 457 Plan.
Frequently Asked Questions
The agreement allows ACC to send these deductions to three (3) approved companies to purchase annuities, mutual funds, or other approved investment products chosen by the employee.
The employee is allowed to postpone payment of taxes on these monthly deductions and any gain on the investment until a later date. If the employee's income is less at retirement, there may be a reduction in the tax ultimately paid. However, an employee who purchases a 457 Deferred Compensation Plan should understand that income tax will be due in any year in which funds are withdrawn form the 457 Plan. ACC does not assume any responsibility either for investment terms or tax status, and there is no guarantee of the investment return or the tax rate that will be in effect at the time of an employee's retirement/withdrawal.
Provisions of the EGTRRA (2001) limit the maximum amount an employee may contribute to tax deferred programs to the following per calendar year:
|Other limitations may be applicable due to age (greater than 50), work tenure, or retirement date.|
How do I start a 457 Compensation Plan?
An employee may start a 457 Plan by enrolling through our online Retirement Manager system and setting up an investment account with one of the ACC authorized vendors. An employee may begin a 457 Plan any time during the calendar year.
Due to the limited number of ACC authorized 457 carriers and investment products, please compare companies to meet your investment goals and risk tolerance. ACC does not endorse any specific carrier, representative, type of contract, or specific investment product, nor guarantee investment return. Please evaluate these issues yourself, keeping in mind your anticipated investment goals. The carrier's representative or customer service agent will assist you in completing the necessary documentation.
- Company's Application with approved vendor
- Online enrollment through ACC Retirement Manager
Can I increase or decrease the amount during the year?
An employee can withhold a set amount per month of 1% up to 100% of monthly check up to applicable IRS annual maximums. Changes in the amount deducted may be made at any time during the calendar year by making your changes online through ACC Retirement Manager
Can I change 457 companies?
Yes, you can change companies by applying to a different authorized vendor and submitting an online change through ACC Retirement Manager. You also have the option to select more than one 457 vendors to invest in at the same time.
Can an employee make partial or complete withdrawals?
Complete and partial withdrawals may be made from a 457 Plan upon termination of employment. Each employee should explore this option with his or her company prior to selecting this option. Major tax consequences or penalties may be involved. Loans are not allowed from the 457 Plan.
How do I stop my 457 Plan?
You may stop your 457 Plan at any time by submitting your change online through ACC Retirement Manager. This will be effective based upon the current cut-off dates.
What penalty tax will I have to pay on early withdrawals?
Withdrawals at or after age 59 1/2 years of age are not subject to any penalty. There is no penalty for withdrawals before age 59 1/2 under the following circumstances:
- termination of employment;
- total disability;
- early retirement at age 55; or
- the withdrawal of an amount necessary to meet emergency expenses.