457(b) Deferred Compensation Plan Overview

The Deferred Compensation Plan is a voluntary plan and is established under Internal Revenue Code (IRC) Section 457(b).  Under the Plan, you postpone receiving (defer) a portion of your salary.

  • You decide, within certain legal limits, how much of your income you want to defer.
  • The City reduces your paycheck before income tax is withheld by that amount and forwards it to Voya on a regular basis.
  • Contributions are invested in the investment options you have selected.
  • The contributions and any earnings that accumulate are not taxed until they are distributed to you.  This is usually at retirement when you may be in a lower tax bracket.
  • Amounts are held for the exclusive benefit of Plan participants and beneficiaries.

This website is intended to be a summary of the Plan provisions.  In the event that a conflict exists between the information contained within this website and the plan document, the plan document provisions prevail.  For more information, please contact your local representatives.

Eligibility

The 457 Plan is a voluntary plan available to all full-time and part-time employees who are eligible for benefits offered by the City and elected officials of the City.

Contributions

Under the Plan, the maximum annual contribution amount is set by the Internal Revenue Service (IRS) based on annual cost of living adjustments.  You may view the current limits below.

Contribution Limits
Year Annual Maximum
2017 $18,000 regular limit
$24,000 Over 50 Catch-up Limit ($6,000 over the regular limit)
$36,000 Normal Retirement Age catch-up limit (Double the regular limit)

* Amount available under the NRA Catch-up is based on your prior contribution history. Contact your local Voya® representative for a calculation to determine how much you may contribute under the NRA Catch-up.

Participants may be able to contribute amounts in excess of the applicable contributions limits if they are eligible for one of two catch-up provisions under the Plan.

You must elect catch-up by completing the City’s catch-up application. To elect the special section 457(b) catch-up provision, please contact our Retirement Readiness Service Center (call center) at (800) 584-6001.

If you are eligible for both catch-up options, IRS rules say you cannot use both in the same year, but you are allowed to use the option that lets you defer the greater amount. For additional information on the 457 catch-up provisions or the annual contribution limits, please view a brochure on 457 contribution limitations.  

Vesting

Your voluntary contributions are automatically 100% vested immediately upon joining.

Distributions

Distributions are allowed only upon severance from employment, death, or the occurrence of an approved unforeseeable emergency, which are considered to be "triggering events."  The 457(b) Plan also includes a provision allowing the in-service distribution of accounts that do not exceed $5,000 if:

  1. You have not made any contributions to the Plan during the prior two years; and
  2. You have not received this type of in-service distribution in the past.

The IRC requires that distributions under a 457(b) plan begin no later than the April 1st of the calendar year following the calendar year in which you attain age 70½ or separate from service, whichever occurs later.  If you fail to receive the minimum required distribution for any tax year, a 50% excise tax is imposed on the required amount that was not timely distributed.  These rules are referred to as IRS minimum required distribution requirements (RMDs).

After you have separated from employment and would like to select a benefit payment option, please call our Retirement Readiness Service Center (call center) at (800) 584-6001 to request a distribution and for the Termination/Distribution Request Authorization form that you will need to complete.

Payment Options

When you are entitled to a distribution of benefits under the Plan, you can choose from any (or a combination) of the payment options described below. Distribution of your account can begin no earlier than 31 days following your separation from service.

  • Periodic payments of your account over a specified period or for a specified amount.
  • Lump sum, or partial lump sum distribution - take all or a portion of your account balance in cash.
  • Annuity Options - choose from a variety of annuity options including a joint and survivor annuity, life annuity and life annuity with period certain.
  • Roll over into another eligible plan - your distribution can be rolled over into a 401(a), 401(k), 403(b), another government 457(b) plan, or a traditional Individual Retirement Account (IRA).  All distributions are eligible for rollover except for:

               - Amounts distributed for an unforeseeable emergency withdrawal;
               - IRS RMDs payable on or after you attain age 70½; and
               - Periodic payments made over your life or a specified period of 10 years or more.
               - Postpone any decision on benefit payments until a later date.

Please note: It is important to understand that a rollover from a governmental 457(b) plan to an IRA or other eligible retirement plan may subject your account to early distribution tax penalties, if a distribution is taken prior to age 59½.

Voya does not offer tax or legal advice.  You should consult with a tax advisor and /or tax attorney concerning your personal situation before making a financial / investment decision.

Divorce

If in the course of your divorce, the court issues a Domestic Relations Order, your account may be split and payments may be made, as specified in the order.  Before this can occur, your employer will review your domestic relations order to determine whether it satisfies the Plan and IRS requirements for a qualified domestic relations order (QDRO).  In the event the alternate payee is your former spouse, he or she is entitled to elect immediate distribution of the amounts awarded under the QDRO.  A spousal alternate payee is also eligible to rollover amounts awarded to another eligible retirement plan in which he or she participates.

For more information, please call your local Voya representative.

Beneficiary Designation and Death Benefits

You are permitted to designate a person or persons to receive payment of benefits in the event of your death.  You designate a beneficiary (or make changes to your previous designation) by completing a Beneficiary Designation Form.  You can obtain this form by contacting our Retirement Readiness Service Center (call center) at (800) 584-6001.  The completed form must be returned to the City of Atlanta.

Upon your death, benefits would be payable to the beneficiary(ies) that you designated under the Plan.  Your beneficiary will be entitled to select from a variety of payment options, which are generally the same options that would have been available to you.  Your beneficiary will need to call the City of Atlanta Benefits Department for validation of beneficiary and appropriate paperwork.

If you have not designated a beneficiary, payment of death benefits will be made first to your surviving spouse, then any surviving children.  If neither applies, then payments will be made to your estate.  The City will direct Voya as to who is entitled to the death benefits.

Taxation

All of the payments you receive from the Plan are subject to Federal and State income taxes.

Federal income tax withholding will apply to your payments, as described below, based on whether you are eligible to rollover the distribution.

  • If you receive a distribution that was eligible to be rolled over, a mandatory 20% will be withheld for Federal tax purposes at the time of payment.
  • If you receive a distribution that was not eligible to be rolled over, 10% will be withheld for Federal tax purposes at the time of payment.  However, you may elect to have no withholding withheld.
  • Amounts distributed from a 457(b) plan are not subject to the IRS 10% premature distribution penalty tax if distributed prior to attaining age 59½.  However, if you have previously rolled over amounts from a plan (including a traditional IRA) other than a government 457(b) plan, such rollover amounts will be subject to this 10% Federal penalty tax if distributed prior to attaining age 59½, unless an IRS exception applies.

Please note: It is important to understand that a rollover from a governmental 457(b) plan to an IRA or other eligible retirement plan may subject your account to early distribution tax penalties, if a distribution is taken prior to age 59½.  Please consult with your tax advisor prior to making an investment decision.

Voya does not offer tax or legal advice.  You should consult with a tax advisor and /or tax attorney concerning your personal situation before making a financial / investment decision.

Unforeseeable Emergency Withdrawals

IRC Section 457(b) defines an unforeseeable emergency as a severe financial hardship to the participant or the participant’s beneficiary (collectively referred to as the “account holder”) resulting from:

  • An illness or accident involving you, your beneficiary, the spouse of you or your beneficiary or a dependent (as defined by the IRS) of you or your beneficiary;
  • The loss of your or your beneficiary’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by homeowner’s insurance, such as a result of a natural disaster); or
  • Other similar extraordinary and unforeseeable circumstances arising as a result of events beyond your or your beneficiary’s control.
  • Even if the account holder meets the above requirements, this does not mean that he/she will be able to withdraw funds from the Plan. Withdrawals are permitted only to the extent the hardship cannot be relieved: (1) through reimbursement or compensation by insurance or otherwise; (2) by liquidating your assets (to the extent this would not itself cause severe financial hardship); or 3) by stopping deferrals under the Plan. Also, participants will not be allowed request an unforeseeable emergency once a distribution has begun.

Situations that may constitute unforeseeable circumstances include:

  • The imminent foreclosure of or eviction from the participant’s or beneficiary’s primary residence.
  • The need to pay for medical expenses, including non-refundable deductibles, as well as the cost of prescription drug medication.
  • The need to pay for the funeral expenses of a spouse or dependent (as defined by the IRS). Only the amount reasonably necessary to meet the emergency need is available for withdrawal.

When you believe that you have incurred an unforeseeable emergency under the Plan, please provide documentation to either Joanne Carter or Jean-Marie Hakizimana to make a determination as to whether your request meets the IRS and Plan guidelines.  Once approval has been granted, you must complete a withdrawal application and a Voya Withdrawal Request Authorization package.  For further assistance, call the City of Atlanta Benefits Department.  Voya’s Retirement Readiness Service Center (call center) is also available at (800) 584-6001 to answer any questions you have regarding applying for a withdrawal. The City will review your request and make a determination as to whether your request meets the IRS and Plan guidelines.

Loans

Loans are not available under the Plan.

 

You should consider the investment objectives, risks, and charges and expenses of the variable investment options offered through a retirement plan, carefully before investing. The fund prospectuses and information booklet containing this and other information can be obtained by contacting your local representative. Please read the information carefully before investing.

Group annuities and mutual funds offered through a retirement plan are intended as long-term investments designed for retirement purposes. Money taken from the annuity will be taxed as ordinary income in the year the money is distributed. Account values fluctuate with market conditions, and when surrendered the principal may be worth more or less than its original amount invested. An annuity does not provide any additional tax deferral benefit, as tax deferral is provided by the plan. Annuities may be subject to additional fees and expenses to which other tax-qualified funding vehicles may not be subject. However, an annuity does provide other features and benefits, such as lifetime income payments and death benefits, which may be valuable to you.

Insurance products, annuities and retirement plan funding issued by (third party administrative services may also be provided by) Voya Retirement Insurance and Annuity Company, One Orange Way, Windsor, CT 06095-4774. Securities are distributed by Voya Financial Partners, LLC (member SIPC). All companies are members of the Voya® family of companies. Securities may also be distributed through other broker-dealers with which Voya has selling agreements. Insurance obligations are the responsibility of each individual company. Product and services may not be available in all states.