Iowa State employees have a new option for socking away retirement savings via payroll deductions.
Starting Oct. 1, a 457(b) plan also will be available as part of the university's voluntary retirement savings plan, which previously offered only a 403(b) plan. Contributing to those plans is an optional way for employees to supplement required retirement fund deductions for either their defined-contribution TIAA account or their defined-benefit Iowa Public Employees' Retirement System pension.
Adding a 457(b) plan provides another way to save for retirement using automatic payroll deductions, an especially beneficial option for faculty and staff who have maxed out their contributions to their 403(b) account.
Similar to 401(k) accounts but for public-sector employees, 457(b) and 403(b) plans can have slightly different rules. However, the university's offerings are the same for both. Neither plan allows penalty-free withdrawals, and they have the same general catch-up provisions. Contributions to either plan can be made on a pretax basis or as a Roth account, which is subject to taxes now but will be withdrawn tax-free in retirement.
Two of the three vendors who offer 403(b) accounts -- AIG and TIAA -- also will offer a 457(b) option. The investment funds available and account fees will be the same.
The university does not match funds contributed to voluntary retirement savings plans. A minimum $20 monthly contribution is required to participate.
Contributions to voluntary savings accounts can be changed at any time through Workday. A job aid outlines the process. An FAQ also is available. For questions about the voluntary retirement savings program, contact the payroll, benefits and tax office at firstname.lastname@example.org.