457 Deferred Comp Plan

As city employees we do not participate in the federal social security system.  This means that long term city employee will receive reduced or no social security benefits at retirement.  Our TMRS retirement plan will provide a pension, but many of you may wish to supplement this by participating in the 457 Deferred Comp Plan that is available to you. As a public sector employee, you have a unique opportunity to build retirement savings and reduce today’s taxes with a Section 457 deferred compensation plan. A 457 plan is a program that allows you to defer compensation on a pre-tax basis through payroll deduction. This pre-tax advantage allows you to defer federal income taxes until your assets are withdrawn.

You should think about beginning to invest what you can afford today.  The longer that you wait, the more you need to invest to obtain the same retirement benefit.  For example,  let's say  you  contributed $100 a pay period for 20 years.  If your account earned 8% a year  you would have accumulated $123,862 in your account.  However, if you wait just five years to begin making the same contribution you would only have accumulated $73,492 in your account.  That is a $50,000 difference.  

The city's 457 plan is managed by ICMA Retirement Corporation.  

For complete information about how 457 plans work, their advantages, and their restrictions, read ICMA-RC’s brochure. You can also read fact sheets in this section about contributions and the 457 Catch-up Provision.