Retirement Plan Types
401(a) and 457(b) Plans
Your pension and Social Security may not be enough to cover your expenses in retirement. That’s why your employer provides both a 457(b) deferred compensation and 401(a) defined contribution retirement plan. These may help bridge the income gap in retirement.
Here are a few reasons to take advantage of one or both of these plans:
- Contributions are automatically deducted from your pay, making saving easy
- Contributions and earnings are tax-deferred, so contributions to either provide tax deferral opportunities
- Both plans may reduce your federal taxable income
- Pre-tax contributions allow more dollars to be invested toward your retirement
- Full control over how your money is invested
- Automatic re-investment of any earnings at no additional cost
- Your money can stay in the plan even after separation from service
- Access to Nationwide Plan Service Representatives up to and throughout retirement
Note: The 401(a) plan has a 31-day eligibility period for enrollment. If you enroll during that time frame the decision to participate and your contribution election are irrevocable. The city’s 457(b) has no eligibility requirement and your contribution election can be changed at any time, subject to timing restrictions.
Both plan types allow you the opportunity to contribute for your retirement and have different contribution limits. Withdrawals from the 401(a) plan prior to age 59 1/2 may be subject to an additional 10% early withdrawal tax if not rolled over to another eligible retirement plan or IRA. Generally, withdrawals from the 457(b) are not subject to this additional tax.
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Talk with one of our Plan Service Representatives to learn more about these plan types. Remember that information provided by Plan Service Representatives is for educational purposes only and is not intended as investment advice. Neither Nationwide nor our representatives offer tax or legal advice. Consult your own counsel before making any decisions.