The Massachusetts Deferred Compensation Investment Account Plan, also known as the Massachusetts DC Plan, is a voluntary retirement savings program offered to public employees working in the state of Massachusetts. This defined contribution plan allows employees to contribute a portion of their salary into tax-deferred investment accounts, helping them to save for retirement while enjoying potential tax benefits. The Massachusetts DC Plan offers participants a range of investment options to choose from, allowing them to tailor their investment strategy according to their individual goals and risk tolerance. These investment options include diversified portfolios of mutual funds, index funds, and target-date funds, carefully selected and managed to provide participants with opportunities for growth over the long term. One notable feature of the Massachusetts DC Plan is the ability for employees to make contributions through payroll deductions conveniently. By opting to allocate a percentage of their salary before taxes, participants can reduce their taxable income and potentially lower their current tax liabilities. This tax-deferral benefit allows their investments to grow on a tax-deferred basis until they decide to make withdrawals during retirement when tax brackets may be lower. Additionally, the Massachusetts DC Plan provides employees with the opportunity to receive financial education and personalized investment guidance. Online tools, resources, and workshops are readily available to assist participants in making well-informed investment decisions and planning for a secure future. The Massachusetts DC Plan includes various investment options to suit participants' preferences and investment objectives. Some of these options within the plan may include: 1. Fixed Income Investments: These options typically consist of bonds and cash equivalents, offering a lower risk profile with more stable returns. 2. Equity Investments: Equity funds invest in stocks of different companies, providing potential for higher returns, but also carrying higher volatility and risk. 3. Target-Date Funds: These investment options are designed to automatically adjust the asset allocation mix as participants approach their targeted date of retirement. It offers a preset diversified portfolio that becomes more conservative over time. 4. Index Funds: These funds aim to replicate a specific market index's performance, such as the S&P 500, by holding the same securities in the same proportions as the index, offering participants a cost-effective and passively managed investment option. 5. Customized Portfolios: Participants may also have the flexibility to create their own diversified investment portfolio by allocating funds among different investment options based on their risk tolerance and investment preferences. It is important for Massachusetts public employees to carefully consider their retirement objectives, risk tolerance, and time horizon when choosing among these investment options provided within the Massachusetts Deferred Compensation Investment Account Plan. Seeking professional financial advice is also encouraged to ensure sound decision-making and proper retirement planning.
Massachusetts Deferred Compensation Investment Account Plan
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Setting specific, measurable, achievable, relevant, and time-bound (SMART) objectives is a good way to plan the steps to meet the long-term goals in your grant. It helps you take your grant from ideas to action.
Annual limit: The minimum contribution amount to participate in the Massachusetts Deferred Compensation SMART Plan (SMART Plan) is 1% of your gross income or $10 per pay period. You can contribute a maximum of 100% of your includible compensation, not to exceed the annual IRS limit of $20,500 in 2022.
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.
An annual administrative fee of 0.08% of your account balance will be charged on a monthly basis. For example, if you have a $10,000 account balance, the annual administrative fee would be $8.
Like the better-known 401(k) plan in the private sector, the 457 plan allows employees to deposit a portion of their pre-tax earnings in an account, reducing their income taxes for the year while postponing the taxes due until the money is withdrawn after they retire.
You get all the benefits of the SMART Plan on your remaining balance. You will have to pay federal and state taxes on the amount you withdraw. You lose out on the potential for tax-deferred growth on the amount you withdraw. If you select a full lump-sum distribution, the full value of your account will be distributed.
You may voluntarily defer additional income into the 457(b) plan/MA SMART Plan through Empower Retirement up to the IRS limit of $22,500 if you are under 50 years of age, or $30,000 if you are 50 years or older. The 457(b)/MA SMART Plan also has a Roth option.
The Massachusetts Deferred Compensation 457 SMART Plan is a retirement savings program available for Commonwealth of Massachusetts state and municipal employees. Eligible employees can save and invest before-tax and after-tax dollars through salary deferrals into our wide array of low fee investments options.