Deferred Compensation Plans – 403(b) and 457(b)

G7.01 Deferred Compensation Plans – 403(b) and 457(b)

Full-time and part-time regular employees are eligible to participate in a tax-sheltered investment program authorized under Sections 403(b) and 457(b) of the Internal Revenue Code through payroll deduction. These investment plans allow employees to save for retirement either on a tax-deferred basis or after-tax (Roth). When contributing on a tax-deferred basis, when employees eventually receive benefits from their tax-sheltered investment, the payments will be reportable as income for tax purposes. Since the reportable income received at retirement is likely to be less than their income while working, there is a potential for tax advantage. If contributing on an after-tax basis, in general and under certain conditions, employees do not pay taxes when receiving benefits since taxes have already been paid. Employees may participate in both a 403(b) and the State of Missouri deferred compensation plan (457 Plan). (Deferred Compensation Plans – 403(b) and 457(b))