Below are the important features about your employer's plan. This website is intended to be a summary of the plan provisions. In the event that a conflict exists between the information contained within this website and the plan document, the plan document provisions prevail.
A 457(b) Deferred Compensation Plan is a type of defined contribution plan available under Section 457(b) of the Internal Revenue Code. State and local governmental entities, including public school districts, may offer a 457(b) Plan. Employee contributions are made through payroll reduction. In addition, public school employees can contribute to a 457(b) Plan without reducing the amount they can contribute to a 403(b) plan.
The Joinder 457(b) Plan — Easy Adoption
A Joinder approach for 457(b) deferred compensation benefits allows your school district to easily join the OASBO Plan and adopt it as your own. This "turn-key" feature of the plan can make implementation both streamlined and simple for OASBO members. This is because the plan design, including the drafting of the plan document, has already been done by OASBO – the organization sponsoring the Master Plan. In this case, since OASBO has already done the legwork to find a provider with extensive experience in plan drafting and also has had its attorney review the legal aspects of the plan document, it’s easy for the individual school districts to simply join into the Master Plan.
Signature-ready plan documents
OASBO offers each member school district its OASBO plan document, which consists of a base plan document and an adoption agreement. The adoption agreement provides flexibility for member schools to select the plan features that appeal to them. Therefore, there is no need for each individual school district to incur additional expenses and time to create their own plan documents.
Signature-ready Joinder Agreement
A single signature by each school district formally allows them to "plug into" the OASBO plan.
Broad investment options menu
The investment options menu has been designed specifically to include a large selection of variable investment options and fixed interest account options that provide a broad risk/reward spectrum. This enables individual participants to construct portfolios based on their individual risk tolerance and time horizon.
See the Investments (Investment Options) section of this site for information about the investment options available through the OASBO Plan.
Please refer to the disclosure materials in your Enrollment Kit (in the “Enrollment” section of this website) and/or the “Performance Report”( in the “Investment Performance” section of this website) for specifics regarding charges, expenses, fees, transfer restrictions, etc.
State-wide consistency and availability
A Joinder Plan provides a consistent 457 retirement vehicle for all member school districts across the State of Ohio. This allows each school district to offer their employees the same benefits and features. Because OASBO is implementing a Joinder Plan, there is availability to all size school districts, regardless of staffing and resource restrictions. This is especially important for those smaller districts, many of which may have limited resources to research, design, and implement their own plan.
Due to the consistent nature of the OASBO Plan, participants who move among member districts can establish an OASBO 457 account with their new member employer and still maintain the same general plan characteristics and investment options. Participants may also be able to roll over their 457 account into their new employer’s OASBO 457 Plan.
A Joinder approach is the best way to ensure that OASBO’s hundreds of districts have a dedicated resource to assist them in continually keeping their 457 plan document in compliance as the tax laws continue to evolve. With the OASBO Plan approach, amendments to the plan document automatically extend to all districts that participate via the Joinder arrangement. The alternative to a Joinder Plan would be to create hundreds of individually designed plans for each school district, all of which would need to be individually updated for ongoing tax reform. This scenario can be problematic, as some of the districts may not have the resources to keep their respective plans in compliance.
Contributions under the Plan are made by participants through a reduction in salary. Under the Plan, the maximum annual contribution amount is set by Internal Revenue Service (IRS) guidelines on a yearly basis. You may view the current limits here.
Catch-up of underutilized amounts
There are two types of potential catch-ups in a 457(b) plan, the special 457(b) catch-up and the age 50+ catch-up.
Special 457(b) catch-up: If elected by a participant in the three years before reaching normal retirement age under the plan and provided that the participant has previously not deferred as much as he could have in prior years, the catch-up limit is two times the deferral limit in effect for the year. (See Limits chart above for information).
Age 50+ catch-up: A participant who is at least age 50 by the end of the calendar year may defer an additional amount.(See Limits chart above for information).
Note: A participant is NOT permitted to use both the 457(b) special catch-up and the age 50+ catch-up simultaneously but must utilize whichever is greater.
To take advantage of the loan feature for non-residential loans, a participant must have a minimum account value of $2,000 with a minimum required loan amount of $1,000. For residential loans, they must have a minimum account value of $5,000 with a minimum required loan amount of $2,500.
A school district may authorize to allow participants to self-certify their loan requests, thus eliminating the need for sponsors to authorize the requests.
To obtain a loan, a participant first must contact their local representative, or contact our customer service associates at 800-525-4225, and request a "loan request form." After the participant reviews and signs the form, he or she must return it for processing in order to obtain the loan itself. Please note: loans will reduce your account balance, may impact your withdrawal value and limit participation in future growth potential. Other restrictions may apply.
Distributions are permitted from the OASBO 457(b) Plan only under the following circumstances:
- Severance from employment
- Unforeseeable emergency (if elected by your school district)
In addition, the IRS requires that you begin receiving minimum distributions at the later of when you attain age 70½ or retire.
Distributions are taxed as ordinary income in the year the money is received. Unlike a 403(b) or 401(a) Plan, if the employee receives a distribution prior to age 59½, that amount is generally not subject to an IRS 10% premature distribution penalty tax. The penalty tax may apply to distributions of non-457 amounts that were rolled into the 457(b) plan.
Participants can receive benefits in any one of the following ways. Remember, taxes are due at withdrawal, so we suggest participants discuss their income tax liability with their accountant or attorney before choosing an option:
- Distribution over lifetime;
- Distribution over lifetime and the lifetime of the designated beneficiary;
- Distribution over a set time period not extending beyond life expectancy;
- Distribution over a set time period not extending beyond the joint and last survivor life expectancy of both participant and beneficiary;
- Lump-sum, or partial lump-sum distribution in combination with one of the other options;
- Estate conservation option that allows participants to receive only the minimum amount required by law at either age 70½ or retirement, whichever comes later; or
- Systematic withdrawal option that provides periodic income for either a specific investment amount, a specific dollar amount, or a specified time period (including life expectancy) at retirement or separation from service.
Distribution at Death
Benefits will be distributed according to the payment method in effect at the time of a participant's death (consistent with the provisions of the plan and applicable required minimum distribution) if a participant dies while receiving benefits. If a participant dies before a payout starts, the named beneficiary may:
- Receive the total current cash value of the account;
- Select another available payout option; or
- Defer payout until the time the participant would have reached age 70½ if the beneficiary is also the participant's spouse.
You should consider the investment objectives, risks, and charges and expenses of the variable product and its underlying fund options carefully before investing. The prospectuses/prospectus summaries containing this and other information can be obtained by contacting your local representative. Please read the information carefully before investing.
Group annuities are intended as long-term investments designed for retirement purposes. Money taken from the annuity will be taxed as ordinary income in the year the money is distributed. Account values fluctuate with market conditions, and when surrendered the principal may be worth more or less than its original amount invested. An annuity does not provide any additional tax deferral benefit, as tax deferral is provided by the plan. Annuities may be subject to additional fees and expenses to which other tax-qualified funding vehicles may not be subject. However, an annuity does provide other features and benefits, such as lifetime income payments and death benefits, which may be valuable to you.