NC Deferred Compensation Plan (457)
The North Carolina Public Employee Deferred Compensation Plan, provided under Section 457 of the Internal Revenue Code as created by North Carolina State Statute, is overseen by a Board of Trustees. The Plan's Board has contracted with Prudential to administer this unique supplemental retirement savings plan. NC Deferred Comp allows for the investment of tax-sheltered contributions into either fixed or variable return options. The State of North Carolina owns the assets in the plan until the participant elects to take an account distribution.
Who's Eligible?
The North Carolina Deferred Compensation Plan 457 is available to temporary, non-temporary university employees who pay FICA (social security/medicare) taxes through the university payroll.
How Do I Enroll?
Enrollment in the NC Deferred Compensation Plan is a simple process. Determine how much to set aside each month, complete the enrollment form with the salary deferral amount and indicate the investment direction of contributions. Designate beneficiaries, sign and date the forms, and return them to the Benefits Office. You can find plan information about the 457 at ww.ncplans.prudential.com
How Much Can I Contribute?
The maximum contribution amount is 100% of compensation less any mandatory before tax contributions to the Teachers and State Employees' Retirement System (TSERS) or the Optional Retirement Plan (ORP), or $16,500, whichever is less. Standard catch-up provisions allow participants who are within 3 years of retirement to defer an additional amount to the 457 Plan outside of the year of retirement. Participants age 50 or older may contribute an additional $5500.
What Investment Choices Do I Have?
NC Deferred Compensation offers a wide array of investment options to meet personal financial goals. Once enrolled in the 457 Plan, participants may change investment allocations and move money between funds through a secure account access system.
When Can I Access My Funds?
A participant of the 457 Plan may access funds when a qualifying distribution option occurs, including retirement, permanent disability, unforeseeable emergency, termination of employment, attainment of age 70 1/2 and death. Distributions are qualified based on Internal Revenue Service regulations and guidelines. At distribution, contributions and interest are treated as ordinary taxable income.
What Are My Distribution Options?
NC Deferred Compensation Plan participants may choose to leave their 457 Plan account intact for future use or choose to receive payment in the form of periodic or fixed annuity payments or a partial lump sum with the remainder paid as periodic or fixed annuity payments. Participants may also elect to roll the account balance over into another qualified plan or Individual Retirement Account. Plan distributions are treated as ordinary taxable income.
Loans - Participants are allowed to borrow the lesser of $50,000 or 50% of the total account balance. The minimum loan amount is $1,000 payable over a maximum of 5 years or 15 years if borrowed to purchase a primary residence. Only one outstanding loan is permitted, and repayments are made through post-tax payroll deductions. Regular contributions are permitted while repaying a loan.
