Employers May Add New Roth Option Starting in March

If your agency chooses to, a new Roth 457 contribution option can be added to the CalPERS Supplemental Income 457 Plan starting in March 2019.

About the Roth option
Taxes are withheld from Roth contributions before they are invested in the CalPERS 457 Plan account. The contributions are not tax-deductible.

The advantage is that in the future, employees may be able to withdraw the money tax-free, as long as they keep the money in the Roth account for at least a five-year taxable period, are age 59½ or older and have a triggering event (severance from employment, reach age 70½, disability or death).

Employees whose agencies add the Roth option are allowed to make both traditional pre-tax and Roth after-tax contributions to the CalPERS 457 Plan. The investments, services, tools and access to licensed experienced local representatives are the same for both types of accounts.

Please make sure the payroll contributions your payroll team submits between late December 2018 and early January 2019 are applied for the correct tax year to your participants’ CalPERS Supplemental Income 457 Plan account.

Here’s how to ensure accuracy during the 2018 year-end payroll reporting period:

• Work closely with Voya^®, the company that handles recordkeeping administration for the CalPERS 457 Plan.
• If the pay end date for the last payroll of 2018:
  • Is not the same tax year as your pay date (for example: your pay end date for the last payroll of the year is December 31, 2018, but your employees will not receive their checks for this payroll period until after January 1, 2019), notify Voya^® by sending an email to CalPERS_Plan_Admin@voya.com. Please include your agency name and number in the email subject line.
  • Is in the same tax year as the pay date for the period, there is no need to contact Voya^®.

If Your Agency Has the Loan Provision, Tell Us
About Payroll Staff and Email Changes Right Away

If your agency has adopted the loan provision, your payroll team works with Voya Institutional Plan Services LLC, the company that handles recordkeeping administration for the CalPERS 457 Plan, to process loan payments.

It is vital to let Voya^® know promptly if there’s a change on your team. Otherwise, emails that alert your team to download the latest loan feedback reports will not reach the right people.

These reports require immediate action. Even a short delay in processing payroll deductions for loans can trigger problems, from loan repayment delinquency to loan defaults and IRS tax bills for borrowers.

Let’s work together to keep things going smoothly. Please report any changes in the names and emails of your team members who handle loans at your agency as soon as possible. Contact CalPERS_Plan_Admin@voya.com.

Contribution And Catch-Up Limits In 2019

Please remind all Plan participants that the Internal Revenue Service raised the limits on contributions in 2019, allowing them to save more for their future.

Make sure your employees who are close to retiring know that they could save more for retirement by making a catch-up contribution to the CalPERS 457 Plan if they are at least age 50, or if eligible, using the Three-Year Special 457(b) Catch-Up.

To use the Age 50+ Catch-Up, a Participant Change Authorization Form should be completed and submitted it to your Benefits Office.

Please work closely with your employees who may be eligible for the Three-Year Special 457(b) Catch-Up. If a participant is within three years prior to the year in which that individual will reach the Plan’s definition of normal retirement age, the participant will need to:

• Calculate the available amount under the Three-Year Special 457(b) Catch-Up in 2019 based on the participant’s prior contributions.
• Complete a Participant Change Authorization Form and Three-Year Special 457(b) Catch-Up Worksheet and return both to you.

Participants who want to increase their current deferrals to the Plan under one of these catch-ups must complete the Participant Change Authorization Form before the first day of the calendar month in which the compensation would be paid or made available.

IRS rules provide that both catch-up options cannot be used in the same tax year. Participants who are eligible for both can use the catch-up option that allows them to contribute the greatest amount in that tax year.

Ask for a Plan Review in the New Year

A review of your agency’s CalPERS Supplemental Income 457 Plan is available at your request. Staying informed can help you satisfy your fiduciary responsibility to oversee the CalPERS 457 Plan at your agency. Email Dave Saavedra or call 1-916-795-3908 to arrange a review in person or as a written document.

RMDs for Employees Ages 70½ and Up

The first required annual withdrawal from the CalPERS Supplemental Income 457 Plan, called a Required Minimum Distribution (RMD), must be taken by April 1 of the year following the year in which participants reach age 70½, or in the year they retire, whichever is later. A 50% IRS penalty tax applies on the RMD amount not taken by the deadline.

Personal Phone Reviews For Your Employees

Your employees can get answers and help with their CalPERS 457 Plan accounts from experienced registered representatives.*

When they use www.calpers457.checkappointments.com to set an appointment, they will receive a confirmation and reminder by email. Or they can call toll free 1-888-713-8244 weekdays 8 a.m. – 5 p.m. (Pacific Time).

* Information from registered Plan Service Representatives is for educational purposes only and is not legal, tax or investment advice. Local Plan Service Representatives are registered representatives of Voya Financial Advisors, Inc. (member SIPC).