The Alabama Deferred Compensation Investment Account Plan is a retirement savings program offered to employees of the state of Alabama and participating employers. It serves as a valuable tool to help individuals save for their retirement years by providing tax advantages and investment options. The Alabama Deferred Compensation Investment Account Plan, often referred to as the Alabama DC Plan, allows participants to contribute a portion of their salary to the plan on a pre-tax basis. This means that the contributions are deducted from their paycheck before taxes are calculated, reducing their taxable income. The plan also offers a Roth 457 option, allowing participants to contribute after-tax dollars and enjoy tax-free withdrawals in retirement. One of the key advantages of the Alabama DC Plan is the ability to choose from a variety of investment options tailored to individual risk tolerance and retirement goals. Participants can opt for professionally managed portfolios, target-date funds, index funds, or individual investment options, allowing them to build a diversified portfolio aligned with their investment preferences. It's important to note that the Alabama DC Plan offers two types of accounts — the 457(b) account and the 401(k) account. The 457(b) account is available to employees of state and local governments, while the 401(k) account is provided to employees of participating non-profit organizations. Both accounts offer tax advantages and investment options, ensuring individuals from various sectors can benefit from the Alabama Deferred Compensation Investment Account Plan. To participate in the Alabama DC Plan, employees must be eligible and enroll during specified enrollment periods. Contributions are typically deducted automatically from their paycheck, making it a convenient and hassle-free way to save for retirement. Participants can also make changes to their contribution amounts or investment options through a user-friendly online platform. In summary, the Alabama Deferred Compensation Investment Account Plan is a retirement savings program designed to help employees of the state and participating employers secure their financial future. By providing tax advantages and a range of investment options, the plan empowers individuals to save and invest according to their unique retirement goals and risk tolerance. The plan offers a 457(b) account for government employees and a 401(k) account for non-profit employees, ensuring accessibility to individuals across various sectors.
Alabama Deferred Compensation Investment Account Plan
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RSA-1 is an Internal Revenue Code Section 457 deferred compensation plan for public employees. This voluntary plan allows you to save and invest extra money for retirement, tax deferred. Not only will you defer taxes immediately, your contributions and any earnings will grow on a tax-deferred basis as well.
A deferred compensation plan withholds a portion of an employee's pay until a specified date, usually retirement. The lump sum owed to an employee in this type of plan is paid out on that date. Examples of deferred compensation plans include pensions, 401(k) retirement plans, and employee stock options.
There are two types of deferred compensation plans: non-qualified and qualified. Non-qualified deferred compensation plans are also referred to as Section 409A or NQDC plans. Deferred compensation plans are not required for all employees.
All RSA-1 distributions are subject to federal income tax. A portion may be subject to Alabama income tax.
RSA-1 FIXED INCOME investment option: The fixed income portfolio is invested in various debt instruments with maturities greater than one year, such as corporate bonds, U.S. agency obligations, mortgage obligations, and commercial paper.
Investing your deferred compensation Your plan might offer you several options for the benchmark?often, major stock and bond indexes, the 10-year US Treasury note, the company's stock price, or the mutual fund choices in the company 401(k) plan.
Tier 1 member: You are eligible to retire at any age with 25 or more years of service or at age 60 with 10 or more years of service. Tier 2 member: You are eligible to retire at age 62 (age 56 for State Police and certified, full-time firefighter and law enforcement officer) with 10 or more years of service.
RSA-1 is a powerful tool to help you reach your retirement dreams. As a supplement to other retirement benefits or savings that you may have, this voluntary plan allows you to save and invest extra money for retirement, tax-deferred.