Participating in the Massachusetts Deferred Compensation SMART Plan may help provide a more comfortable and secure financial future. The Plan is established under the Internal Revenue Code Section 457, which allows eligible employees to save and invest before-tax or Roth 457 contributions through salary deferrals.
The SMART Plan is a voluntary retirement savings program. Take advantage of this valuable employee benefit – Save Money And Retire Tomorrow.
The Benefits of Saving for Retirement
There are numerous benefits to begin saving for your retirement now. For starters, it may help make a better retirement future a reality. You can also benefit from:
- Convenience – Contributions are taken out of your paycheck automatically, so you don't have to worry about transferring money toward your retirement yourself.
- Contributions – Saving with before-tax contributions lowers your current taxable income. You also have the option to contribute after-tax Roth dollars to your plan.
- Compounding – The money you put away for retirement, and any earnings, have the opportunity to grow over time – tax-deferred – until you take distributions in retirement.
- Competitive Investment Options – The SMART Plan offers participants two paths to investing, so you can choose the level of involvement that is right for you. Choose the path that includes the SMARTPath Retirement Funds or the path that allows you to Build and Monitor Your Own Portfolio, which includes a variety of diversified, professionally managed investment options with competitive fees.
- Advice – Access Reality Investing® Advisory Services (Advisory Services). Advisory Services uses a behavior-based approach to investing that utilizes investment advisory tools and services based upon the level of involvement you desire in managing your investments. You can choose as much or as little help as you need. Learn more today. There is no guarantee that participation in Advisory Services will result in a profit or that your account will outperform a self-managed portfolio.
For more information about the Plan, review the SMART Plan Overview.
Ready to get started? Enrolling is easy! Click here to get started.
What is a 457 deferred compensation plan?
A 457 deferred compensation plan is a retirement plan that allows you to make contributions into an account established on your behalf. Your contributions are made on a before-tax basis, and all earnings are tax-deferred. The amounts accumulated on your behalf may be distributed at retirement or due to another qualifying event, such as separation from service or death.
How does the SMART Plan work?
The Massachusetts Deferred Compensation SMART Plan is established under Internal Revenue Code Section 457.
- You decide, within IRS legal limits, how much of your income you want to defer.
- Your employer will reduce your paycheck before tax by that amount.
- Contributions are invested in the investment options you select.
Who is eligible to participate in the SMART Plan?
The SMART Plan is open to employees of the Commonwealth of Massachusetts and participating governmental entities. There are no age or service requirements to enroll or participate in the SMART Plan.
Does participation in the SMART Plan reduce my State pension/retirement benefits?
No. The Plan is supplementary and does not replace or reduce pension/Social Security benefits.
May I transfer or roll over assets from my other retirement plans into the SMART Plan?
Yes. You may consolidate retirement accounts (401(a), 403(b) and/or IRA) into the SMART Plan at any time. However, all non-457 assets transferred into the SMART Plan remain subject to the IRS 10% early withdrawal penalty that does not apply to 457 contributions. In addition, SMART Plan assets transferred to another retirement account (401(a), 403(b), IRA, etc.) may become subject to the IRS 10% early withdrawal penalty when distributed from the new plan. Consult with a tax advisor for more information regarding possible tax implications.
May I transfer or roll over my SMART Plan account balance if I separate from service?
Yes. You have two choices when you separate from service:
- You can transfer your account balance to another eligible 457 program if your new employer accepts this type of transfer. You may also roll over your account balance to a 401, 403(b) or IRA. Keep in mind that your 457 assets may then become subject to the IRS 10% early withdrawal penalty.
- You may leave your money in the SMART Plan and continue to take advantage of the low fees, diverse selection of investment options, account management tools, and local representatives.
How do I get more information about the SMART Plan?
For more information, call (877) 457-1900 to speak with a customer service associate or contact your local representative.
How much can I contribute?
The minimum contribution amount to participate in the SMART Plan is $10 per pay period or 1% of your gross income, whichever is less. You can contribute a maximum of 100% of your includible compensation, not to exceed the annual IRS legal limit of $18,000 in 2015.
Beginning January 1, 2015, if you are age 50 or older during the calendar year, you may contribute an additional $6,000. This amounts to a total possible contribution of $24,000.
If you are within three years of your normal retirement age, you may use the Three-Year Catch-Up provision that allows you to save an additional $18,000 in 2015. This amounts to a total contribution of up to $36,000. The maximum is limited by the amount of underutilized deferrals from prior years.
The Age 50+ Catch-Up and Three-Year Catch-Up and provisions cannot be used in the same year. Contact your local representative for additional information.1
|Annual Limit||Age 50+ Catch-Up for participants age 50 or older||Three-Year Catch-Up three years prior to normal retirement|
|2015||$18,000||$24,000||Up to $36,000|
May I increase, decrease, restart or stop my contribution amount?
You may elect to increase, decrease, restart or stop your payroll deductions to the SMART Plan at any time. Sign in to your account using your Username and Personal Identification Number1 (PIN), and then elect to "Change Your Paycheck Contribution" under the Transaction menu option.
If I participate in another retirement plan, is my annual contribution limit reduced?
No. There is an opportunity for you, if eligible, to participate in multiple retirement plans and maximize contributions. Annual contribution limits are not reduced for deferrals to 403(b) and 401(k) plans.
1 The account owner is responsible for keeping the assigned PIN confidential. Please contact Empower Retirement immediately if you suspect any unauthorized use.
When can I withdraw money from my account?
Your money may be withdrawn when you:
- Reach age 70½
- Separate from service
- Experience an unforeseeable emergency as defined by IRS guidelines
- Die (your designated beneficiary(ies) will receive your benefits)
- Have an account balance that does not exceed $5,000, you have not made a contribution in the last 24 months and have not previously taken advantage of this rule.
What are my distribution options?
When you are eligible for a distribution, you may:
- Leave your money in the SMART Plan until required minimum distributions begin at age 70½
- Roll over to another eligible retirement plan (e.g., 401(k), 403(b), 457, IRAs, etc.)
- Receive your benefits using one of the Plan's distribution options:
- Complete withdrawal
- Partial withdrawal
- Automatic monthly, quarterly, semi-annual or annual withdrawals for a specific length of time or a specific amount
- Automatic required minimum distribution
How do I find out more about my distribution options?
Contact your local representative for assistance in understanding the Plan's distribution options and determining which distribution option is best for you.
Once I choose a benefit payment option, can I make a change?
Yes, you can make a change. Call the SMART Plan Customer Service Center at (877) 457-1900 to request paperwork.
When am I required to begin receiving distributions?
The IRS requires that distributions begin no later than April 1 following the calendar year in which you turn age 70½ or separate from service, whichever occurs later. If you fail to receive the minimum required distribution for any tax year, a 50% excise tax is imposed on the required amount that was not distributed on time. This rule is referred to as the IRS Minimum Required Distribution (MRD).
What happens to my money when I die?
Upon your death, benefits would be payable to your designated beneficiary(ies). Your beneficiary(ies) will need to contact the SMART Plan Customer Service Center at (877) 457-1900 to discuss the various distribution options and apply for a distribution.
How do I make or change my beneficiary designation?
You can make or change your beneficiary designation online. Sign in to your account using your Username and Personal Identification Number (PIN), and then elect "Beneficiary" under the My Profile menu option. You may also complete the appropriate Beneficiary Designation form located here.
How do I apply for an unforeseeable emergency withdrawal?
Contact the SMART Plan Customer Service Center at (877) 457-1900 to request paperwork. A customer service associate can answer questions you may have regarding your eligibility for a withdrawal.1
1 Representatives of GWFS Equities, Inc. are not registered investment advisors and cannot offer financial, legal or tax advice. Please consult with your financial planner, attorney and/or tax advisor as needed.
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