The Savings Plus Plan (SPP) is a voluntary program which allows eligible state and CSU employees to save toward retirement by investing pre-tax or after-tax (Roth) contributions made through payroll deductions. This investment opportunity is offered through two deferred compensation plans:
- Thrift Plan (IRC 401k); and, a
- Deferred Compensation Plan (IRC 457)
You're eligible to enroll in a Savings Plus 401(k) and 457 plan if you're currently employed by the State of California, and you're eligible for membership in CalPERS, or if you separate from CSU system employment and return to service as a "rehired annuitant." (The term "rehired" annuitant, used in the CSU system, is also known as "retired annuitant" among State employees.) You're not eligible to participate in Savings Plus if you're in the Part-time, Seasonal, and Temporary (PST) Program.
One of the decisions you face when you sign up for Savings Plus is which plan to enroll in: 401(k) or 457. You can enroll in both, but that also means you'll pay administrative fees for both. The Savings Plus Plan comparison chartsummarizes the two plans side by side.
401(k) Plans and 457 Plans have some things in common. For instance, both plans allow for before-tax contributions, Roth contributions, and rollover contributions from prior employer plans. Both plans limit withdrawals to qualifying circ*mstances, and both plans allow for age-based deferrals (age 50 or older). Once you contribute money to one of these plans within Savings Plus, it must remain in that plan until you're eligible for distribution.
The key differences between the 401(k) Plan and 457 Plan are as follows:
If you plan to retire before age 55 and begin withdrawals immediately, you should know that early withdrawal penalties apply to the 401(k), but not the 457 Plan.
Another difference is that you can withdraw funds from a 401(k) for a primary residence or college tuition, but not from a 457 account.
The 457 plan contains a “catch up” provision that allows you to contribute a higher amount to make up for the years you were eligible to contribute to a retirement plan but didn't. The 401(k) doesn't have this provision.
For more information or to enroll, go to http://savingsplusnow.com/.
What is the Minimum Contribution Allowed?
457b Deferred Compensation Plan (DCA): $50 Per Month Per Plan
401(k) Thrift Plan: $50 Per Month Per Plan
What is the Maximum Contribution Allowed?
Employees may make maximum contributions to a 403(b) plan and a 457 plan. For example, for tax year 2020, a participant could elect to contribute up to $19,500 to a 403(b) plan AND up to $19,500 to a 457 plan, for a total contribution of up to $39,000.
However, contributions to a 403(b) plan are offset by any contributions to a 401(k) plan in the same tax year. Employees contributing to both a 403(b) and a 401(k) plan are restricted by IRS regulations to a combined total of $19,500.
- Participants may contribute to both a 403 (b) and 401(k) plan in the same tax year, however, combined contributions across both plans can not exceed $19,500.
- Each employee is responsible for their own calculations and to make sure the IRS limits are not exceeded.
What is a Tax Year?
- Tax years for CSUN employees are calculated by Pay Periods: December 1 through November 30.
Can I Roll Over Funds From Another Plan?
- If you have funds with a prior employer’s retirement plan in a 401(k) or a 457 Plan you may want to consider a rollover.
How Can I Save Taxes on My Unused Vacation Payout?
When you retire or separate, you may transfer unused vacation pay to your Savings Plus 401(k) and/or 457 accounts. You may also transfer it to a 403 (b) plan. Normally, when you cash out unused vacation credits the payment is taxable, but if you transfer it to your Saving Plus account you won’t owe taxes until you withdraw the funds.
If you would like to proceed with the transfer, visit the SavingPlus Web Site, selectForms/Publications/Support, and under more forms, find the "Lump Sum Separation Pay" form. Please remember to contact Payroll Administration at ext-2101 90 days before separating or retiring, and to submit your request in writing at least 45 days in advance.
