The State Deferred Compensation 457 Plan (also known as the 457 Plan or Deferred Comp) is an optional investment plan available to all employees receiving compensation from the University. Participants may choose to invest pre-tax and/or Roth (after-tax) money in this Plan. Income from the Deferred Compensation Plan is not subject to State of Illinois tax when taken as a qualified distribution. Participating in the Deferred Compensation Plan can help supplement retirement planning, and will not reduce any other University benefits.
The Deferred Compensation Plan is administered by the State of Illinois, with Empower as recordkeeper.
Eligibility
You are eligible to participate in the Plan if you were employed prior to July 1, 2023 and are receiving compensation from the University.
If first employed on or after July 1, 2023 you are eligible if:
- You are not SURS eligible or
- You transferred from another State agency and you were contributing to the State 457 Plan on June 30, 2023.
You must be able to contribute a minimum of $10 per pay period or 1% of your gross pay per pay period. You do not need to be eligible for State insurance or other benefits to participate.
Participation can be started or stopped at any time, subject to payroll schedules.
Contribution Limits
The minimum amount that you may contribute to the Plan is $10 per pay period or 1% of your gross pay per pay period. The maximum amount you may contribute is determined by the IRS:
- For calendar year 2023, the maximum is $22,500.
- For calendar year 2024, the maximum is $23,000.
The State of Illinois Deferred Compensation 457 Plan and the SURS DCP are both 457 Plans, so they have a single, combined joint IRS limit. This means that your contributions to either one or both cannot exceed and $22,500 in total for calendar year 2023 ($23,000 for calendar year 2024).
You may be able to contribute two times the normal limit in the 3 calendar years ending before the year in which you attain Normal Retirement Age. If you are 50 or more years old at the end of the calendar year, you may also be eligible for an additional “catch-up” contribution of up to $7,500. If you are eligible for both catch-up provisions, only the most generous catch-up provision for which you qualify will apply.
If you need help determining your maximum contribution limit, contact University Payroll & Benefits (UPB).
There is no employer contribution in this plan.
Plan Summary
For details, see CMS Deferred Compensation Plan.
Participation in the Plan is voluntary, and does not reduce any of your other University benefits based on salary – such as SURS retirement, long-term disability, life insurance, or survivor benefits. You may start or stop contributing at any time, and you are always fully vested in your contributions.
Plan Fees
In order to cover expenses of the Plan, participants are also assessed an annual fee of no more than 1% of the account balance (up to a maximum of $67 per year). Other fees may be applicable. For more information, see CMS Deferred Compensation Plan.
Deferred Compensation Income in Retirement
Retirement withdrawals from pre-tax contributions and earnings are subject to federal income tax. The State of Illinois does not tax retirement income from the Deferred Compensation Plan if taken in accordance with plan provisions, at full retirement age, as a legal resident of Illinois.
Retirement withdrawals from Roth (after-tax) contributions and earnings are not subject to federal or state income taxes as long as they are part of a qualified distribution. A qualified distribution is generally one that is made five years after the year of the first Roth contribution and when a participant attains age 59½, dies, or becomes disabled.
Withdrawals taken prior to retirement or not meeting the criteria for a qualified distribution may be subject to additional taxes or penalties. Questions about taxation of retirement income should be discussed with a tax professional.
Questions?
For questions about deductions and your contributions, contact UPB.
For questions about Plan rules and catch-up contributions, contact the CMS Deferred Compensation Office.
For questions about available funds, enrollment, beneficiaries, contribution changes, your account, account value, and investment changes, contact Empower at 833-969-ILDC (833-969-4532).
Resources
State of Illinois Deferred Compensation Plan Enrollment Flyer
State 457 Plan Highlights
State 457 Plan Roth Flyer
State 457 Plan Educational Videos
About Empower
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