457(b) Plan Overview
The Chicago Public Schools 457(b) Plan
- Choices and control over how your contributions are invested in any combination of investment options offered under your plan.
- You can contribute to the 457(b) Plan without reducing the amount you can contribute to the 403(b) TDA.
- Withdrawals of your 457 contributions and earnings prior to age 59½ are not subject to an IRS 10% premature distribution penalty tax (distributions will be taxed as ordinary income when distributed; any amounts rolled into the 457(b) Plan from a non-457 plan will still be subject to the IRS 10% premature distribution penalty tax unless an exception applies)
- Two "catch-up" provisions that allow certain employees to contribute additional money above the annual contribution limit. Note that IRS rules require that both catch-ups cannot be used in the same year; a participant eligible for both catch-ups is able to use the catch-up that permits the greater deferral.
- Portability of your account to another eligible retirement plan
- A variety of payout options at retirement
Contributions under the Plan are made by participants through a reduction in salary. Under the Plan, the maximum annual contribution amount is set by Internal Revenue Service (IRS) guidelines on a yearly basis. You may view the current limits here.
CPS will reduce your paycheck (before income tax) by that amount and forward it to Voya on a regular basis. Your contributions are invested in your choice of any combination of the investment options available through the plan (see Investment Options for a complete list).
- One loan is allowed every 12 months
- Minimum account balance of $2,000 required
- Minimum loan amount is $1,000
- Net interest rate of 2.5%
- distribution over your lifetime;
- distribution over your lifetime and the lifetime of your designated beneficiary;
- distribution over a set time period not extending beyond your life expectancy;
- distribution over a set time period not extending beyond the joint and last survivor life expectancy of both you and your beneficiary;
- a lump-sum, or partial lump-sum distribution in combination with one of the other options;
- an estate conservation option that allows you to receive only the minimum amount required by law at either age 70½ or retirement, whichever comes later; or
- a systematic withdrawal option that provides periodic income for either a specific investment amount, a specific dollar amount, or a specified time period (including your life expectancy) at retirement or separation from service.
Generally, withdrawals from a deferred compensation plan are not allowed unless you sever from employment, die, or incur an "unforeseeable emergency" as defined by the Internal Revenue Code. An unforeseeable emergency means a severe financial hardship to the participant resulting from:
- an illness or accident of the participant or beneficiary, the participant's or beneficiary's spouse or dependent;
- loss of the participant's or beneficiary's property due to casualty; or
- similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the participant or the beneficiary.
This definition does not generally include the purchase of a principal residence or payment of college expenses.
A governmental 457 plan may also include provisions allowing for additional access to funds in your account. Funds may be withdrawn by an alternate payee under a qualified domestic relations order once your account is divided in accordance with a court order. You may also be able to transfer funds from the 457(b) Plan to the state defined benefit plan, for the purchase of service credit under the state defined benefit plan.
You should consider the investment objectives, risks, charges and expenses of the variable product and its underlying fund options carefully before investing. The prospectuses contain this and other information, and can be obtained by contacting your local representative. Please read the prospectuses carefully before investing.
Variable annuities are long-term investments for retirement purposes. Withdrawals from a 457(b) plan are generally permitted upon severance from employment, death, or the occurrence of an unforeseeable emergency. Amounts distributed from the annuity will be taxed as ordinary income when distributed. Account values fluctuate with market conditions, and when withdrawn, the principal may be worth more or less than the original amount invested. Tax deferral is provided by the plan and the annuity does not provide any additional tax deferral benefit. Annuities may be subject to additional fees and expenses to which other tax-qualified plan funding vehicles may not be subject. However, annuities provide 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.