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 DEFERRED COMPENSATION
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Deferred Compensation Plan FAQ's
HOW IT WORKS
What is the County's 457 Deferred Compensation Plan? Why would I want to defer any of my salary
from the County? Who is eligible to participate?
Anytime. New employees may enroll anytime after receiving their first paycheck. Current employees may enroll anytime during the year. There is no specified enrollment period. What is the minimum amount I may contribute? The minimum contribution is $20 each pay period. What is the maximum amount I may contribute?
How will my salary deferrals be reflected on my income tax return? The taxable income reported in the annual W2 form is reduced by the amount you deferred during the taxable year. Can I ever contribute more than the maximum amount? Yes. If you did not defer at the maximum levels in earlier years, you may, under certain circumstances, qualify to exceed the regular maximum in one or more of the three calendar years immediately prior to your attaining normal retirement age. The Treasurer’s Office can provide further assistance and can explain what age is considered “normal retirement age”, which varies for different types of employee groups. Can I discontinue participation after I join? You can increase, decrease, or stop your contributions at any time. If you stop contributing, you may restart at any time. See the section on forms to request the appropriate form. The Plan currently is administered by Prudential Retirement Services, Inc., one of the largest defined contribution managers with over 70 years of retirement services experience. Prudential does not charge any fees from participants for the administration of the program. However, the County of Alameda charges an administrative fee (currently $3.10 per month per participant) to defray the County’s cost for in-house Plan support services. Can I participate in the Deferred Compensation Plan and still have an IRA? Participating in the Deferred Compensation Plan does not affect your ability to have an IRA. However, depending on your income and marital status, you may not qualify to deduct contributions to an IRA. Consult your tax advisor for more information. Does my participation affect my Social Security or County retirement benefits? No, you are entitled to exactly the same Social Security and County retirement benefits whether or not you join the Deferred Compensation Plan. Does the County make any matching contributions to the Deferred Compensation Plan? No, the County of Alameda does not make any matching contributions to your account. To enroll, you must file Enrollment forms with the Treasurer's Office. Request a Deferred Compensation Plan Retirement Planning Guide from the Treasurer's Office. Follow the simple instructions, then return the completed forms to the Treasurer's Office. The Enrollment forms must be completed accurately and received by Prudential before assets are accepted. If your form is incomplete, it will be returned to you for completion. A GREAT SAVINGS TOOLWhich is a better savings tool, the Deferred Compensation Plan or an IRA? The Deferred Compensation Plan may be better for a number of reasons. With deferred compensation, every dollar you contribute and earn is tax-deferred. With an IRA, your contributions may not be tax-deferred (consult your tax advisor), and even if they are, your maximum annual IRA contribution is just $5,000 in 2008. Another advantage of the Deferred Compensation Plan is that it makes saving automatic through payroll deductions, whereas an IRA requires a conscious decision and self-discipline to make deposits. How does deferred compensation beat conventional savings? Deferred Compensation gives you a significant tax break because the program allows you to invest the full amount of your contribution, pre-tax. In conventional savings, there is no tax-deferral privilege, thus, your savings are essentially reduced by the taxes you have to pay on the taxable income. Does it matter when I begin saving? It makes a huge difference. If you begin saving $100 each pay period today and earn an average of 8% annually, in 20 years you’ll have $123,862 available. If you wait five years to start, in 15 years your account would have only $73,492. That’s a $50,000 difference in your account. Over time, compounding of earnings contributes a significant amount to the growth of your savings. You should contribute as much toward your retirement as you can afford, because every extra dollar you save will have an enormous impact over the long term. The Deferred Compensation Plan Retirement Planning Guide includes an exercise to help you determine how much you need to retire, and illustrates how compounding accelerates your money's growth from year to year and how tax-deferred investing beats taxable investing. INVESTING YOUR MONEYWhat investment products are available? Check the "GoalMaker" section of this website for more information. Also, review the detailed investment information in the Retirement Planning Guide.
Click here for phone numbers and website details. Is the money invested in mutual funds insured? Mutual funds are not insured against market fluctuations. They are insured against fraud and embezzlement. How do I get investment advice? The Treasurer and his Deferred Compensation Plan staff cannot give investment advice, but the Office provides you with the materials you need to make an informed decision. The ultimate decision lies with you as the investor. The local Prudential Representative will provide you with personalized service if needed, including retirement planning. TRACKING YOUR INVESTMENTSHow can I access the balance of my account? Participants can call Prudential Retirement Services to access their account balance, which is updated daily. Account balances may also be obtained through the Prudential website: http://www.prudential.com/online/retirement. How can I track the performance of the various investment options? Quarterly account statements showing account balance, confirmation of transactions, and investment results are provided to participants by Prudential Retirement Services. Fund performance and prices may be obtained through the Prudential website: http://www.prudential.com/online/retirement. MAKING CHANGES How can I change my name, address, or beneficiary? Submit a Change of Name, Address or Beneficiary form to the Treasurer’s Office. How often can I change my investment allocations and how do I do this? Unrestricted exchanges are allowed among the investment options, with the following exception: Equity Wash Rules prohibit the direct transfer of funds from the Guaranteed Interest Account (GIA) to another GIA. You must first transfer to a non-competing fund for a minimum of 90 days before transferring to a GIA competing fund. Please contact a Prudential Representative for a complete list of competing funds. To exchange between funds, contact Prudential Retirement Services or the Prudential web site. All exchange requests are effective the same day that Prudential receives them, if received prior to 4:00 p.m. Eastern Time. Exchange requests received after 4:00 p.m. Eastern Time are processed the next business day. Your exchange is processed using closing market prices on the day your transaction is processed. How will I know that Prudential processed a transaction? After each transaction, you will receive a written confirmation from Prudential. This will be mailed to your home address of record. This applies to transactions submitted by mail on the appropriate form, by phone, or on the Internet. You may also contact Prudential Retirement Services or the Prudential web site to confirm transactions. When can I discontinue or restart deferrals and how do I do this? To discontinue or restart deferrals, submit a Payroll Modification form to the Treasurer’s Office. Payroll modifications are effective the month following receipt by the Treasurer's Office and not less than two (2) pay periods. If I make a change in my payroll deferral amount, when will it take affect? Deferrals or changes to your payroll contributions are effective the month following receipt by the Treasurer's Office and not less than two (2) pay periods. WITHDRAWING YOUR MONEY What is the earliest date that I am allowed to withdraw funds from my account? The following conditions allow payout of benefits:
However, a special circumstance allows in-service withdrawal of funds, i.e., a financial hardship withdrawal. This type of withdrawal has strict qualifying requirements. The Treasurer’s Office will provide a financial hardship packet if you need one. Payment methods available are:
For more information, print a Payout Request form and Payout Instructions. What is the latest date that I am allowed to postpone receiving payout from my account? You must begin receiving benefit payments no later than April 1 of the calendar year following the year you reach 70 ½, or the year in which you actually retire, if later. After I separate from service, how long do I have before I must make my payout decision? If you are thinking about leaving employment or if you have already separated, print the Payout Request Form (Distribution Election for Governmental 457 Plans) and Payout Instructions. This packet of information includes general information and instructions regarding payout options and instructions/procedures for distribution of funds. Or you may request the form and information from the Treasurer's Office. If you do not want to take an immediate payout, choose the option, "I elect to defer receipt of benefits until a later date" on the form. What happens in the event of my death? In the event of your death, your designated beneficiary is eligible to withdraw your Deferred Compensation Plan benefits. Your beneficiary has 60 days to notify the Treasurer’s Office for when to begin payments. If I cease participation in the Plan, may I withdraw my money? No, you cannot withdraw your Plan assets while still employed. You may only receive an in-service withdrawal due to a financial hardship caused by an unforeseeable emergency as defined by the IRS. Can I roll over my account into an IRA? Do I have other rollover options? The Internal Revenue Code now permits assets from a deferred compensation plan to be rolled over to a traditional IRA. Also, you may transfer your assets in the Alameda County plan to another public agency’s 457 Deferred Compensation Plan if that agency’s plan accepts rollover assets. FOR MORE INFORMATION Where can I get more information? If you would like to:
contact Linda Hulme in the Treasurer’s Office
via phone at 1-510-272-6809 (tie line 26809) or via email.
If you would like more detailed information or specific account information, contact Prudential by one of the methods below.
Access account information through the Prudential website: http://www.prudential.com/online/retirement. Note: To access account information, you will need your Account Number and User Personal Identification Number (PIN). Your Account Number is your Social Security Number. Call Customer Service to request a PIN number. Local 457 Retirement Representative Mark Tomei - Financial Advisor Mr. Tomei is available for financial counseling in the Treasurer's Office conference room, on Tuesdays and Thursdays, from 9:00 a.m. to 5:00 p.m., by appointment only. Please call 1-800-450-8841 to schedule an appointment through Mr. Tomei's assistant. |
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