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Retirement Today Newsletter

August 13, 2024

Retirement Essentials: Your 457(b) Plan Benefits

Supplementing your retirement income

When we look at averages, pension benefits may only cover around 40-50% of your needed annual income in retirement. So, where will the rest come from? Participating in the Erie County Deferred Compensation Plan is one way to help give your retirement savings a boost. Read on to learn more about the plan’s specific details. Or if you’re ready, you can enroll and begin contributing today!

Enroll in your Erie County Deferred Compensation Plan to get started. 

Enroll today

Understand your retirement plan’s benefits

…and how they can help you prepare for the future

Opportunities offered through the Erie County Deferred Compensation Plan

  • Immediate eligibility: no age or service requirements to participate
  • Convenient payroll deduction
  • Both pre-tax and Roth after-tax contributions allowed
  • Higher annual contribution limit of $23,000 versus an IRA limit of $7,000
  • No income limitation for plan participation in Roth after-tax option (versus a Roth IRA)
  • Changes to contributions can occur at any time
  • Immediate vesting of employee contributions and any associated earnings
  • Rollovers into the Plan are allowed
  • Permissible withdrawals for unforeseen emergencies; subject to approval
  • Fee equalization to ensure that qualified participants pay fees in proportion to their individual account balances
  • Wide variety of investment options including a fixed interest option1 with a current rate of 3.10%
  • Guided Portfolio Services® (GPS)2 offered at a reduced fee
  • Access to a dedicated team of financial professionals

Learn more about your Deferred Compensation Plan details.

See details

1. Policy Form series GFUA-398, a group fixed unallocated annuity issued by The Variable Annuity Life Insurance Company, Houston, Texas.

2. Guided Portfolio Services (GPS) is an optional service that offers two approaches to help you achieve your retirement goals. One approach is for do-it-yourselfers. The other is great for those who prefer to have someone else do it for them. Both approaches deliver objective advice from independent financial expert, Morningstar Investment Management LLC, including how much to save, which investments to choose and how much to invest in each. GPS is offered through VALIC Financial Advisors, Inc. and is available for an additional fee. For more information, contact your local financial professional

What is a 457(b) deferred compensation plan and how does it differ from a 401(k) plan or 403(b) plan?

If you’ve worked for a different employer, you may be familiar with the variety of employer retirement plans that are out there. Although there are commonalities, there are also some key differences between these defined contribution plans.

The Erie County Deferred Compensation Plan is a 457(b) governmental plan that offers you the ability to make contributions to help supplement the benefits you may expect to receive from the New York State & Local Retirement System pension and/or Social Security.

Review the chart below to see how 457(b) plans compare to other defined contribution employer retirement plans.
 401(k)403(b)457(b)
Employers Private companies (for profit businesses)Public schools, churches, and certain 501(c)(3) tax-exempt organizationsCertain state and local governments and Internal Revenue Code Section 501
Maximum annual employee contribution*$23,000$23,000$23,000
Annual catch-up contribution limit for ages 50+*$7,500$7,500$7,500 (for governmental 457(b) plans)
Maximum annual plan contribution*Lesser of: 1. 100% of compensation, or 2. $69,000Lesser of: 1. 100% of compensation, or 2. $69,000Lesser of: 1. 100% of compensation, or 2. $23,000
Special contributions allowed?NoYesYes
10% early withdrawal penalty?Yes (unless an exception applies)Yes (unless an exception applies)No (with the exception of any rollover amounts)
Roth allowed? YesYesYes (for governmental 457(b) plans) 
Withdrawal for financial difficulty allowed?Yes—hardship withdrawal (subject to 10% early withdrawal penalty)Yes—hardship withdrawal (subject to 10% early with drawal penalty)Yes—unforeseen emergency withdrawal (no 10% early withdrawal penalty)
Rollovers to other eligible retirement plans (401(k), 403(b), governmental 457(b), or IRAs)YesYesYes (for governmental 457(b) plans)
    

Source: “403(b) vs. 401(k) vs. 457(b)—what’s the difference?” article, johnhancock.com. December 19, 2023.

Financial Wellness: Tackling Student Debt

Student loans – Options for student debt repayment and forgiveness

After more than a three-year pause in response to the COVID-19 pandemic, federal student loan borrowers began repayments on student loans in October of 2023. Leading up to repayments starting, Americans anticipated the repercussions that this monthly bill would have on their savings momentum. In fact, more than one in five borrowers claimed they would need to reduce savings overall (29%), for emergencies (29%) and retirement (22%) to make ends meet.* 

The pressing question is, how can you save for retirement while paying off your student loans? Finding a balance is important, but understandably challenging. As a first step, here are a few questions to ask yourself to get started:

1. What is the interest rate on your student loans? In many cases, student loan interest is lower than the return you could expect to get in the stock market. Therefore, you’d be earning more on your retirement savings than you’d be spending on loan interest.

2. How can you maximize the tax advantages? Retirement contributions have tax advantages. Student-loan interest is also tax deductible, up to $2,500 in 2023. Look at your specific situation and see if there’s a way to get the most of both tax benefits by both saving for retirement and paying down your student loans.

There are also plenty of benefits to paying your student loans off early – and they aren’t just financial benefits.

You pay less money overall
The earlier you pay off your student loans, the less you pay in interest. And depending on the rate on your student loans, that could be a significant chunk. The interest rate on private student loans can exceed 10%, making them quite costly. Even just a few percent on a large balance adds up over time.

You have more money for other goals
When you remove student loans as a line item in your budget, you free up more money for other financial goals, including retirement. You can also reallocate that money toward a house down payment, medical procedures, children and many of life’s other expenses. And it’s not just the increased cash flow that will help you reach other goals. You’ll also have a lower debt-to-income ratio, which makes you a more attractive candidate for future loans like a mortgage.

It’s possible that you qualify for student loan forgiveness or can enroll in federal repayment programs that could potentially lower your monthly payments. Learn more about Savi – a social impact technology firm – that helps non-profit and public service workers take control of their student loans. Corebridge and Savi also partner to host recurring webinars where you can learn about things like: 

  • Repayment options 
  • Eligibility for Public Service Loan Forgiveness (PSLF) 
  • Savi’s support with repayment and forgiveness paperwork 
  • Latest policy updates

Register for an upcoming student debt webinar.

Register now

Advisor Connection: Meet with a Professional

Your Corebridge financial professionals are here to help

Reach out to a member of your financial professional team for assistance with enrolling, reviewing your account, or creating a financial plan to meet your goals. Even if you’re not a participant in the Erie County Deferred Compensation Plan, you can still meet with a financial professional at no cost to you. The team is also available to meet with you at your work location! To see when a financial professional will be onsite, review and bookmark our appointment page.

Elizabeth House

Financial Advisor

Cell: 716.255.6783
Email: Elizabeth.House@corebridgefinancial.com

 

Schedule an appointment with Elizabeth House

Michael Williams

Financial Advisor
Cell: 716.388.8932
Email: Michael.Williams2@corebridgefinancial.com

 

Schedule an appointment with Michael Williams

Sonia McHenry

Client Experience Advisor
 

Office: 281.878.2755
Email: Sonia.McHenry@corebridgefinancial.com

 

Schedule an appointment with Sonia McHenry

RO 3617531 (8/2024)
A 1495903 (8/2024)