Deferred Compensation Plan For Highly Compensated Employees In Arizona
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A deferred compensation plan is another name for a 457(b) retirement plan, or “457 plan” for short. Deferred compensation plans are designed for state and municipal workers, as well as employees of some tax-exempt organizations.
The normal contribution limit for elective deferrals to a 457 deferred compensation plan is $23,500. Employees age 50 or older may contribute up to an additional $7,500 for a total of $31,000.
ASRS retirees, alternatively, do receive their Social Security benefit in addition to their pension benefit. A smaller base benefit.
These 457(b) and 401(a) plans allow you to contribute a portion of your salary to supplement your retirement savings. Both deferred compensation plans are designed to help you increase your retirement income.
In technical terms, your ASRS pension plan is a 401(a) Defined Benefit plan, while a 401(k) is classified as a Defined Contribution plan. There are many differences between the two.
They're more like an agreement between you and your employer to defer a portion of your annual income until a specific date in the future. Depending on the plan, that date could be in 5 years, 10 years, or in retirement.
