UC 457 B Plan Overview and Benefits

The UC 457 B Plan is a flexible and tax-efficient way to save for retirement. It allows you to make after-tax contributions to a retirement account.

You can contribute up to $19,500 per year, and an additional $6,500 if you're 50 or older. This is a significant amount of money that can add up over time.

The plan is designed to provide a steady income stream in retirement, with a minimum guaranteed interest rate of 4% per year. This can help ensure that your retirement savings keep pace with inflation.

Contributions are made with after-tax dollars, which means they're not subject to income taxes when you withdraw them in retirement. This can help you keep more of your hard-earned money.

To be eligible for the USC 457(b) Plan, you must have earned at least $269,000 by Dec. 31, 2024, and attest that you're an accredited investor.

Eligibility is determined each calendar year based on the earnings of the prior year. To be eligible, your final 2024 total eligible earnings must equal or be greater than the plan's annual dollar threshold.

The university is responsible for administering the plan and retains the sole right to interpret and construe the plan. They also reserve the right to amend the plan in any respect at any time, and to terminate the plan.

Upon termination, all accounts under the plan will be distributed as soon as administratively possible in accordance with applicable IRS rules.

To be eligible for the USC 457(b) Plan, you must have earned at least $269,000 by December 31, 2024, as defined in the plan document.

Eligibility is determined each calendar year based on the earnings of the prior year. You can't just sign up for the plan, you have to meet certain requirements to participate.

The plan's annual dollar threshold is used to determine eligibility, and for 2025 participation, that threshold is $269,000. If you don't meet this threshold, you won't be eligible to participate in the plan.

To be eligible, you must also attest that you are an "accredited investor" by meeting the criteria set forth in the USC 457(b) Salary Deferral Agreement. This is a separate requirement from the earnings threshold.

Here are the specific requirements for eligibility:

Keep in mind that these requirements may be subject to change, and it's always a good idea to check the plan document for the most up-to-date information.

The university is responsible for administering the 457(b) plan, which includes performing duties required for the plan's operation and retaining the right to interpret and construe the plan.

As the plan administrator, the university has the sole right to determine all questions pertaining to eligibility and benefits under the plan.

The university reserves the right to amend the plan in any respect at any time, giving them flexibility to make changes as needed.

Upon termination of the plan, all accounts will be distributed as soon as administratively possible in accordance with applicable IRS rules.

You can change your investment allocation at any time, subject to the investment company's regulations.

You may select funds offered by one of the three provided investment companies: Fidelity Investments, TIAA, or Vanguard.

These investment companies offer various funds, but you'll need to contact them directly to change your investment allocation within each company.

You can change your investment allocation within each investment company by contacting them directly.

If you're terminating your employment with the university, you'll have four distribution options to consider.

You can choose to receive a single lump-sum payment of your entire account balance, which will be taxed as ordinary income for the year it's paid.

This is the default option, so if you don't make a choice, you'll automatically receive your account balance on or about the 120th day after termination.

Alternatively, you can elect an annuity that pays out in equal installments for your lifetime, or for the joint lives of you and your beneficiary.

You can also choose to receive payments for a fixed period of not less than one year and not more than 20 years.

Lastly, you can make a direct tax-deferred transfer to your new employer's nongovernmental 457(b) plan, but be aware that federal tax laws limit the kinds of plans that can accept rollovers from this plan.

Here are your distribution options in a nutshell:

The USC 457(b) Plan is an additional retirement account that helps eligible employees invest and save for retirement while deferring taxable compensation each year.

Eligible employees can defer up to $23,500 in taxable compensation in 2025, which is a significant amount to save for retirement. The plan is intended to benefit eligible USC employees who also contribute the maximum IRS contributions allowed under the 403(b) USC Retirement Savings Program.

The university does not contribute to this plan; contributions are made entirely through employee salary deferrals. This means that employees have to make the effort to contribute to the plan, but it's a great way to take control of their retirement savings.

Here are the key differences between the USC 457(b) Plan and the UCRP:

The USC 457(b) Plan is a great way to supplement the UCRP pension, and employees can choose to contribute to one, all, or some combination of the three voluntary plans: 403(b), 457(b), and Defined Contribution (DC) Plan.