If you earn a minimum of $160,000 per year in salary from the University, and you contribute the maximum to the University’s voluntary 403(b) plan, you may also save and invest your own money on a pre-tax basis to build additional assets for the future through the 457(b) Plan. Click here to view the current IRS retirement plan limits. 

There are certain job titles that are eligible to participate even if earnings are below the threshold listed above. For more information, please call HR-Benefits at 305-284-3004. 

When You Can Participate

If you meet the eligibility requirements above, you may enroll in the 457(b) Plan at any time. When you enroll, you sign a salary reduction agreement authorizing the University to reduce a portion of your salary and remit it to the investment company you choose. You also complete an investment company application indicating your fund elections. Contact HR-Benefits Administration to obtain enrollment applications.

Designating a Beneficiary

You should also name a beneficiary as soon as you enroll in the 457(b) Plan. Your beneficiary is the person who will receive your benefit if you die before receiving payment from the plan. You may change
your beneficiary at any time, subject to spousal consent rules, by completing and returning the appropriate designation of beneficiary form to your investment company.

If you are married, you must name your spouse as the beneficiary of your 457(b) Plan benefit. If you wish to name someone other than your spouse as your beneficiary, you must obtain your spouse’s written, notarized consent.

Please note that if you are unmarried, name a beneficiary and subsequently marry, your prior designation is invalid and your spouse will be your beneficiary, unless you obtain proper spousal consent to a different beneficiary. Similarly, if you become divorced, any prior beneficiary designation becomes invalid and you will need to complete a new designation of beneficiary form and return the completed form to your investment company.

If there is no valid beneficiary form on file when you die, your spouse (if you are married) or your estate (if you are single) will automatically become your beneficiary. For purposes of this plan, your spouse is your opposite-sex spouse as defined by the federal Defense of Marriage Act.

The Tax Advantages

Under Section 457(b) of the Internal Revenue Code, your contributions to the Plan are not subject to current federal income tax. You declare and pay tax only on the balance of your salary after your contributions to the Plan. Other benefits, however, such as your group life insurance, pension and Social Security, are figured on your full base salary before your contributions to the Plan are deducted from your pay.

The funds in your account, including any earnings on your investment, will not be taxed until you receive them.

Internal Revenue Code Limits

Your voluntary contributions to the 457(b) Plan may not exceed the annual dollar limit for pre-tax contributions as specified under the Internal Revenue Code (IRC) and adjusted by the Internal Revenue Service (IRS) each calendar year. For 2014, the dollar limit for pre-tax contributions is $17,500.  In 2015, the dollar limit for pre-tax contributions $18,000. You may be eligible for catch-up contributions if you are within three years of Normal Retirement Age 65 and have not contributed the maximum to the 457(b).  Please contact HR-Benefits at 305-284-3004 to determine whether you may be eligible for catch-up contributions.

Investment Options

Investment options are offered through TIAA-CREF and Fidelity.  It is important to thoroughly review and carefully consider the investments available on a regular basis and to make changes as needed.

Emergency Distributions

Although this program was established to encourage you to save for your retirement, you may be eligible to receive a distribution due to an unforeseeable emergency while you are still working.  Please contact HR-Benefits for more information at 305-284-3004.

As a participant in the UM 457 (b), per the Internal Revenue Code, this Plan must be considered “unfunded” which means that your deferrals of salary (including any earnings on those deferrals) must be part of UM’s general assets. This means that in the unlikely event that UM ever became insolvent, your deferrals under the Plan and any investment earnings that have accrued would be subject to the claims of UM’s general creditors and you might lose part or all of your benefits. You should consider this in deciding whether to participate in the Plan.

Furthermore, when you leave the University, there is less flexibility with a Section 457(b) Deferred Compensation Plan than there is with a 403(b) Plan in your ability to change the timing of distributions from the Plan.

Distribution Options

1. Timing:  Participants have a 60 day window following termination of employment to elect to defer the distribution until a later specified date, but no later than age 70 ½.  Participants also have a second window period to defer payment, but (again) in no event beyond age 70 ½.  This second election must occur 60 days prior to the originally scheduled distribution date. The employee does not have flexibility beyond this second election to control the timing of when to take the distribution. Failure to make a timely election to defer payment results in a taxable distribution.
2. Payment Form:  Participants can only receive their 457(b) account as a single lump sum. Monthly annuity and installment options are not available under the plan.
3. Rollovers:  The 457(b) plan is technically a nonqualified plan. Therefore, participants cannot rollover money into a qualified plan (e.g., 403(b), 401(k) or IRA). Participants can elect a “plan to plan transfer” to another 457(b) plan of a new employer. This would avoid current taxation. However, note that the new employer’s plan must permit the transfer.  Also, the transfer election must occur during one of the two election periods described above (either the first or second).