About
A 457(b) Deferred Compensation Plan is a voluntary retirement plan offered by
the City of Tacoma, created to allow you to put aside money from each paycheck
toward retirement. Contributions are made to the account in your name via
payroll deduction for the exclusive benefit of you and your beneficiaries. The
value of the account is based on your contributions made and the investment
performance over time.
A deferred compensation plan can help bridge the gap between what you have in
your pension and Social Security, and how much you'll need in retirement.
Depending on what plan you choose, your contributions may be pre-tax or
post-tax.
Pre-tax contributions you make reduce your taxable income for the year. These
contributions and all associated earnings are then not subject to Federal tax
until you withdraw them. You also may be able to make after-tax Roth
contributions which allow for potentially tax-free earnings.
The annual contribution limit for the
Traditional 457
(pre-tax) and
Roth 457
(post-tax) combined must adhere to the annual maximum limits.
Investing
You control how your account is invested, choosing from a wide range of
options available through the City’s plans.
Withdrawals
You can make withdrawals from your account when you leave employment with the
City and have the ability to take payments as needed or request scheduled
automatic payments. You maintain control over your investments and continue to
benefit from tax deferral even after you leave.
During employment, subject to the City’s plan and IRS rules, you may also
be able to make withdrawals after age 70½ or due to an unforeseeable
emergency. A loan option is also available.
Withdrawals are generally taxable but, unlike other retirement accounts, the 10%
penalty tax does not apply to distributions prior to age 59½ (the penalty
tax may apply to distributions of assets that were transferred to the 457 plan
from other types of retirement accounts).
Beneficiaries
You designate directly with your Deferred Compensation vendor, a beneficiary,
or beneficiaries, to receive any remaining assets upon your death. Designating
beneficiaries can help ensure your assets are paid per your wishes, avoid the
potential costs and delays of probate, and allow non-spouse beneficiaries to
receive additional tax benefits.
Limits and Options
|
Options
|
Traditional 457
|
Roth 457
|
|
Pre-tax contributions
|
Yes
|
No
|
|
Available to all City employees
|
Yes
|
Yes
|
|
2023 annual contribution limits
If contributing to the Traditional 457 and the Roth 457, annual contribution limit is for both plans COMBINED.
Contributions are payroll deducted from every pay period.
|
Regular Deferral
$22,500
Age 50 Catch-Up
$30,000
Pre-Retirement
Catch-Up
$45,000
|
Regular Deferral
$22,500
Age 50 Catch-Up
$30,000
Pre-Retirement
Catch-Up
$45,000
|
|
Matching from the City
|
Yes
Only for Police & Fire
|
No
|
|
Borrowing from your balance
|
Yes
Specific IRS rules apply
|
No
|
|
Tax on post-separation distributions
|
Yes
At the Federal level of 20%
|
No
|
Please refer to the plan documents for detailed information or contact the
plan representatives listed below.
City Deferred Compensation Rules, Policies and Information
Enrolling and Making Deferral Changes
Deferral decreases must be made using your Vendor Portal (links to each vendor and instructions are below). These changes will take affect immediately.
Deferral increases and new enrollments must also be made using your Vendor Portal (links to each vendor are below). All enrollments/increases will take affect first of the month after you make the change.
If you have any questions, contact the Benefits Office at (253) 573-2345.
Enrollment and Changes
Instructions for online enrollment and changes for all MissionSquare
Instructions for online enrollment and changes for Local 31 only
2023 Limits for Deferred Compensation
The monthly amounts shown in these documents are calculated based on changes being made prior to January 1. If you wish to make the maximum allowable contributions for the year after January 1, please recalculate your monthly contribution based on the number of remaining pay dates for the year. Your timekeeper can assist you with this information if you do not have it.
Employee Contribution Limits (Except Commissioned Police and Fire)
Employee Contribution Limits (Police Local 6 Only)
Employee Contribution Limits (Police Local 26 Only)
Employee Contribution Limits (Fire Local 31 Only)
Employee Contribution Limits (PPSMA Only)
MissionSquare Retirement (formerly ICMA-RC) Financial Planning Webinars can be found here.
MissionSquare Visits
---All Appointments are currently online only---
|
Location
|
Day
|
Time
|
|
Tacoma Public Utilities
Cafeteria Conference Room
|
Third Thursday
|
9 AM - 3:30 PM
|
|
Tacoma Municipal Building
Room 902
|
Third Wednesday
|
9 AM - 3:30 PM
|
|
Tacoma Police Dept.
HQ
|
Second Thursday
|
9 AM - 4 PM
|
|
ES Solid Waste
Cafeteria
|
Quarterly
|
9 AM - 4 PM
|
|
ES CTP
First Floor Conf. Room
|
Quarterly
|
8 AM - 3 PM
|
|
PW Streets and Grounds
|
Quarterly
|
7:30 AM - 10:30 AM
|
|
Loveland Substation
|
Quarterly
|
8 AM - 11 AM
|
Deferred Compensation Board Meetings