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What are 457 (b) Retirement Plans?

The basics of a 457(b) Plan. A 457(b) plan or more commonly referred to as a Deferred Compensation Plan is a type of defined contribution retirement plan offered by local and state employers and certain tax-exempt organizations which qualify.  Generally, municipal authorities and local governments, state employers or state utilities employ this type of retirement savings vehicle in addition to pensions which may be offered.  Like a 401(k) plan, which helps you save for retirement, an employee can defer up to $19k per year into their plan, and if they are over age 50, can add another $6k for catch-up provisions.  Similar to 401(k) plans these deductions are tax deferred and can decrease your overall tax liability or taxable income for the year. 

How to get started.  In New York State an employee has the option to start their deferred compensation plan after a certain time of service, just like in a 401k plan.  Once that time frame has been addressed an employee can sign up online via the New York State Deferred Compensation Plan Website: https://www.nysdcp.com.  SC Parker can also help to navigate through that process.  After filling out the basic information an employee will receive a packet in the mail outlining their options.  An account number will be received and from there one can then start to contribute from their paycheck.

Choosing Investments.  Under the TIER 1 option these plans offer pre-set investment options for employees to choose as their portfolio.  These are normally based on one’s time horizon until retirement and will adjust automatically as one gets closer to the set retirement date.  TIER 2 offers a little more flexibility for the do-it-yourselfer.  The plan will present a group of different investments in multiple asset classes and the employee can build their portfolio as they see fit.  Last but not least is the TIER 3 option.  This is where SC Parker can offer the most advisement.  Once we have an understanding of what your goals and aspirations are for the ideal picture of retirement, we can then personally tailor the portfolio to your specific situation using a variety of investment instruments that may or may not be available under your employer’s 457 plan for Tier 1 and Tier 2 options.  We will monitor and adjust the portfolio as needed to help you reach your retirement goals. 

Though organizations may differ with the steps needed to participate in their 457(b) plans our financial representatives can help in the various processes from enrollment, investment and retirement. 

SC Parker is one of Buffalo’s longest tenured independent investment firms.  Our professionals are here to assist clients in achieving their financial goals.  We would be happy to perform a complimentary review of your unique circumstances and provide a customized financial retirement plan to fit your needs.

Located centrally on Main Street in Williamsville, we can be reached at (716) 632 – 6800 or through our website, www.scparker.com.