Deferred Compensation 457(b) Plan
The City of Madison offers an optional Deferred Compensation 457(b) plan to permanent employees. The City does not make matching contributions toward the 457(b) plan. Because there is no defined enrollment period, eligible employees may enroll in the 457(b) plan at any time during employment with the City. The standard minimum contribution is $25.
Wisconsin State Retirement System annuities generally replace only a portion of your wages, so many employees use a Deferred Compensation plan to fill in the income gap. 457 plans are primarily set up for public employees, to replace private sector 401(k) plans.
Both Traditional and Roth 457 options are available to City employees. Traditional 457 plan contributions are deducted from your pay before taxes are collected. With a Traditional 457, contributions and earnings are taxed upon distribution from the account. Roth 457 plan contributions are deducted from your pay after taxes are collected. With a Roth 457, contributions and earnings are not taxed upon distribution from the account. Prior to enrolling in the plan, consider discussing with a 457 plan representative whether Traditional 457 and/or Roth 457 contributions may better fit your individual needs.
Employees have the opportunity to participate in the 457(b) plan with two separate plan administrators. One plan administrator is ICMA-RC and the other plan administrator is the Lincoln Financial Group. Both plan administrators offer a variety of investment options for employees. To begin contributing to a 457(b) account, visit the ICMA-RC or Lincoln Financial Group pages to find the appropriate plan enrollment form and to find information on scheduling an appointment with a plan representative to discuss enrollment/investment options.
Withdrawals can only be made from your 457(b) account after separation from employment with the City of Madison, except in narrowly defined emergency situations (please see information below on emergency withdrawals).
Lincoln Financial Group & ICMA-RC Maximums (2022 plan year)
Both the Lincoln Financial Group and ICMA-RC have a maximum yearly contribution, which is regulated by Internal Revenue Code.
| Age | $ per year |
|---|---|
| if you are age 49 or under | $20,500 |
| if you turn age 50 or over in 2022 | $27,000 |
| if you are using the Catch-Up Provision | $41,000 |
Lincoln Financial Group & ICMA-RC Maximums (2022 plan year)
Both the Lincoln Financial Group and ICMA-RC have a maximum yearly contribution, which is regulated by Internal Revenue Code.
| Age | $ per year |
|---|---|
| if you are age 49 or under | $20,500 |
| if you turn age 50 or over in 2022 | $27,000 |
| if you are using the Catch-Up Provision | $41,000 |
Emergency Withdrawals
A provision in your deferred compensation plan allows withdrawals in the event of an unforeseeable emergency. This withdrawal is only permitted if a genuine emergency exists which can only be met by such a withdrawal. Emergency withdrawals are regulated by Internal Revenue Code. Learn more about Deferred Compensation Emergency Withdrawals.
More Information
For more information, please see the Employee Benefits Handbook.