FAQ

The Florida Deferred Compensation Plan is a supplemental retirement plan for Government employees in the State of Florida, established under Internal Revenue Code (IRC) Section 457b. The Plan supplements any retirement benefits offered by the Florida Retirement System (FRS) and the Social Security Administration (SSA). Participants may contribute a portion of their income through payroll deduction each pay period.

Payroll contributions made can be either 457b Pre-Tax or 457b Roth (post-tax). 457b Pre-Tax payroll contributions are tax-deferred, meaning you will pay withholding when you take a distribution. 457b Roth payroll contributions are subject to all applicable wage-withholding requirements at the time they are contributed. Qualified distributions from 457b Roth payroll contributions (and the interest they earn) are tax-free.

No. Participants continue to earn creditable service towards the FRS and continue to pay into the SSA each pay period.

All payroll contributions to the Florida Deferred Compensation Plan (both 457b Pre-Tax and 457b Roth) have immediate vesting.

• Easy to understand fee structure and low fund expense fees
• Excellent investment options, including Fixed Accounts, Target Date Funds, numerous Mutual Funds, and a Self-Directed Brokerage Account
• Penalty-free account modification, such as contribution change, investment reallocation, and Investment Provider addition/replacement
• 457b Pre-Tax and 457b Roth payroll contributions are allowed
• Consolidate other eligible retirement accounts
• Dedicated customer service and professional investment performance oversight from the Bureau of Deferred Compensation and the Plan’s Investment Providers
• Immediate vesting

457b Pre-Tax:

• Payroll contributions that lower taxable income
• Distributions taxed as income
• Penalty-free withdrawals after 31 days of separation from employment

 457b Roth:

• Post-tax payroll contributions
• Qualified distributions are not included in gross income
• 457b Roth qualified distribution rules apply

The Florida Deferred Compensation Plan is an excellent way to increase retirement security. Contributions can be 457b Pre-Tax and/or 457b Roth (post-tax), and Participants benefit from exceptional investment options.

No. Participants are not required to take or move an account balance once leaving employment. Funds can remain in the Florida Deferred Compensation Plan, and Participants may continue benefiting from lower fees and oversight by the Bureau of Deferred Compensation. Participants will also continue with the ability to change asset allocations or Investment Providers.

The amount and type of risk varies from one investment to another. As with any investment, there is always the possibility you could lose your principal, unless you are invested in a Fixed Account. Some products are guaranteed against loss of principal. It is important you understand the risks involved in your investment choices. You may wish to consult an investment advisor to help you understand the risks involved with your investment options and your own tolerance for the various types of risk.

The Department of Financial Services analyzes the financial condition of the investments on a quarterly basis. All assets of the Plan are held in trust for the exclusive benefit of Participants and their beneficiaries. The State of Florida owns such assets, and the Chief Financial Officer of Florida acts as Trustee, while the Participants and their beneficiaries hold the equitable interest. This trust fund is, by definition, not subject to the claims against and the creditors of the State of Florida.

Participants have the option to designate both Primary and Contingent Beneficiaries* to receive the account balance upon death. If any Primary Beneficiaries predecease the Participant, that portion will go to any Contingent Beneficiaries. If both Primary and Contingent Beneficiaries predecease the Participant, or in the absence of any selected beneficiaries, the account becomes part of the deceased Participant’s estate. Beneficiaries may elect to receive a one-time lump sum distribution, partial distribution, or receive payments for the remainder of their life or another specified period.

*Participants can make or update beneficiary designations at any time; however, it is recommended to designate them as soon as possible, preferably at enrollment.

A mandatory 20% Federal Income Tax will be withheld from lump sum distributions, partial distributions, and any distribution from your Pre-Tax payroll contributions, with less than a 10-year payout. Pre-Tax distributions will be reported as ordinary income in the year received, and your Investment Provider(s) will provide you with the 1099 Form(s) stating the proper amount of income to include on a Federal Tax Return.

• Use the Enroll Now button on MyFloridaDeferredComp.com to fill out and submit the online EZ Enrollment Form. This option allows you to set up 457b Pre-Tax and/or 457b Roth payroll contributions in one step.
• Print and complete the 457b Pre-Tax and/or 457b Roth EZ Enrollment Form(s), located at MyFloridaDeferredComp.com, under Publications, Administrative Documents, and Forms. Either fax (850-488-7186) or mail (200 East Gaines Street, Tallahassee, FL 32399) the completed form(s) to the Bureau of Deferred Compensation. Complete both the 457b Pre-Tax and 457b Roth EZ Enrollment Forms to elect both 457b Pre-Tax and 457b Roth payroll contributions at enrollment.
• Contact an Investment Provider to set up enrollment.
• Set up enrollment using an Investment Provider’s online enrollment procedure, via the Provider’s website.

No. Participants can use the online Increase Contributions Form or contact their Investment Provider(s) to start 457b Roth payroll contributions.

Beneficiary designations apply to both 457b Pre-Tax and 457b Roth payroll contributions held by a Participant’s Investment Provider(s). Participants with multiple Investment Providers should designate beneficiaries with each of their Investment Providers.

The minimum payroll contribution is $20 per monthly pay period or $10 per bi-weekly pay period. Contributions as a percentage cannot exceed 80% of a Participant’s paycheck. The maximum contribution limits for 457b retirement plans are determined by the Internal Revenue Service (IRS) and are updated yearly. Both 457b Pre-Tax and 457b Roth payroll contributions are combined and subject to Internal Revenue Code (IRC) Section 457b limits.

For the most up-to-date maximum limits, see Internal Revenue Code (IRC) Section 457b at IRS.gov, or view the current contribution limits and suggested bi-weekly and monthly deferral amounts at  MyFloridaDeferredComp.com under Publications, Administrative Documents, and Forms.

View the Current Contribution Limits and Suggested Bi-Weekly and Monthly Deferral Amounts

Yes. Participants may stop*, restart, decrease, or increase 457b Pre-Tax and 457b Roth payroll contributions at any time. There are deadlines for making changes to contribution amounts, which are based on payroll warrant date deadlines. Please consult the Bureau of Deferred Compensation for more information about warrant date deadlines.

*Stopping a payroll contribution to the Plan does not cancel or close the account, and balances must remain in the Plan until separation from service.

Yes. Your employer can make matching contributions on your 457b Roth contributions. However, your employer can only allocate your 457b Roth contributions to your 457b Roth account. Your employer must allocate any contributions to match 457b Roth contributions into a pre-tax account.

A 457b Pre-Tax payroll contribution is a type of elective deferral made to your 457b Deferred Compensation Plan from your paycheck.

The amount of the 457b Pre-Tax contribution is not included in the employee’s gross income at the time of the payroll contribution. Distributions from the account are included in gross income and subject to all applicable wage-withholding requirements.

A 457b Roth payroll contribution is a type of elective deferral made to your 457b Deferred Compensation Plan from your paycheck.

With a 457b Roth payroll contribution, the employee irrevocably designates the deferral as an after-tax contribution. The amount of the 457b Roth contribution is included in the employee’s gross income at the time of the payroll contribution and is subject to all applicable wage-withholding requirements. Qualified distributions are not subject to income tax.

Yes. You can contribute to both 457b Pre-Tax and 457b Roth in the same year in any proportion you choose.

No. Once you designate contributions as 457b Roth contributions, you cannot later change them to 457b Pre-Tax elective contributions.

Yes. Your ability to contribute to a Roth IRA does not change by making 457b Roth contributions.

Currently, the 457b Roth does not restrict higher wage earners from contributing. An employee can contribute the annual maximum to the 457b Roth, regardless of their earned income.

No. Although you can contribute to a Traditional IRA or Roth IRA for your spouse, based on your earned income, you cannot contribute to the 457b Roth for your spouse.

Standard Catch-Up is an IRS provision that provides an increased annual contribution limit as retirement approaches. Participants may become eligible for Standard Catch-Up three years before their normal retirement age and may participate in Standard Catch-Up for a period of up to three consecutive years. Standard Catch-Up eligibility can be determined by contacting the Bureau of Deferred Compensation.

The Florida Deferred Compensation Plan has three Investment Providers and a Self-Directed Brokerage option. The Plan offers three types of investments: Fixed Accounts, Target Date Funds, and Mutual Funds.

The Bureau of Deferred Compensation publishes the “Quarterly Performance Report” that presents the historical rates of return and expense ratios for all investment products available in the Plan. This report compares the performance and fees and should be reviewed before enrollment in the Plan. The “Quarterly Performance Report” is in the Plan Watch Booklet* and the booklet is updated after each quarterly review. The Plan Watch Booklet is available at MyFloridaDeferredComp.com under  Publications, Administrative Documents, and Forms.

View Report

*If you would like to receive this booklet by mail, please contact the Bureau of Deferred Compensation.

Participants may select more than one Investment Provider with contributions split between them. Participants may transfer between Investment Providers at any time without penalty. Additionally, Participants have the option of stopping contributions and leaving their balance with one Investment Provider, while enrolling with and contributing to another.

No. The same investment options are available for 457b Pre-Tax and 457b Roth payroll contributions.

You decide how to direct your payroll contributions to the Plan. Contact your Investment Provider for additional information.

Yes. Roth conversions are available to retired and separated employees. Please contact your Investment Provider for additional information.

Yes. Contact your Investment Provider for information about the conversion of existing 457b Pre-Tax contributions to 457b Roth contributions.

There is no income tax withholding required on an in-plan 457b Roth conversion. Please contact your Investment Provider for additional information.

Yes. Assets from eligible pre-tax and post-tax retirement accounts (e.g. 401k, 403b, 457b, DROP, FRS Investment Plan, or IRAs) can be consolidated into the Plan. Contact your Investment Provider to request the Rollover Into/Out of Florida Plan Form to begin this process.

Accrued leave payments may be invested into the Plan as 457b Pre-Tax or 457b Roth payroll contributions—provided the annual contribution limit is not exceeded.

457b Pre-Tax accrued leave payments are subject to Social Security and Medicare taxes. The portion of your payment held for Social Security and Medicare taxes is considered taxable income and will be subject to Federal Income Tax. The State Payroll System uses a formula that satisfies these tax requirements and calculates the maximum possible accrued leave contribution. The amount deferred will not be subject to Federal Income Tax.

If you elect to contribute your leave payout as a 457b Roth contribution, the entire contribution will be taxed as income and will be subject to Social Security, Medicare, and Federal Income Tax.

A qualified distribution is generally a distribution that is made after a 5-taxable-year period of participation and is either made on or after the date you attain age 59 ½, made after your death, or attributable to your being disabled.

If a distribution is made to your alternate payee or beneficiary, then your age, death, or disability is used to determine whether the distribution is qualified. The only exception is when the alternate payee or surviving spouse rolls over the distribution to his or her own employer’s designated Roth account, in which case, their own age, death, or disability is used to determine whether the distribution is qualified.

A qualified distribution from a 457b Roth account is not included in your gross income.

The 5-taxable-year period of participation begins on the first day of the taxable year for which you first made 457b Roth payroll contributions to the Florida Deferred Compensation Plan. It ends when five consecutive taxable years have passed. If you make a direct rollover from a designated Roth account under another plan, the 5-taxable-year period for the recipient plan begins on the first day of the taxable year that you made designated Roth contributions to the other plan, if earlier.

If you are a re-employed veteran making 457b Roth contributions, your 457b Roth contributions are treated as made in the taxable year of qualified military service that you designate as the year to which the contributions relate.

Certain contributions do not start the 5-taxable-year period of participation. For example, a year in which the only contributions consist of excess deferrals will not start the 5-taxable-year period of participation.

If you take a distribution from your 457b Roth account before the end of the 5-taxable-year period, it is a nonqualified distribution. You must include the earnings portion of the nonqualified distribution in gross income. However, the basis (or contributions) portion of the nonqualified distribution is not included in gross income.

If you take a distribution from 457b Roth conversions, within 5 years of that conversion, it may be subject to a 10% recapture tax. Contact your Investment Provider for additional information.

Distributions must meet the definition of a qualified distribution for tax-free treatment. Qualified distributions must be made after the end of the 5-year period, beginning with the first year for which a 457b Roth contribution was made to the Plan, and the Participant must have either reached age 59 ½ , become disabled, or have died.

An employee must meet the definition of a qualified distribution for tax-free treatment.

• Periodic Distribution (on a schedule)
• Partial Distribution (taken when needed)
• Full Distribution (liquidate the account)
• Roll Out (move out of the Plan)

The Investment Provider will withhold the mandatory 20% for Federal Income Tax* for lump sum distributions, partial distributions, and those with less than a 10-year payout. The distributions will be reported as ordinary income in the year received, and the Investment Provider will provide you with a 1099 Form, stating the proper amount of income to include on a Federal Tax Return.

There may also be a 10% penalty if you are taking a distribution from your DROP 401a assets that have been rolled into the Deferred Compensation Plan if you are under the age of 59 ½. Exceptions to this 10% penalty are for:

1. Separation from service in or after the year you turn 55 (or age 50 for eligible public safety employees).

1. Distributions that are made at any age as part of substantially equal periodic payments (made at least annually) until you reach 59 ½, at which time you may change distribution methods.

   Please contact a tax advisor or call the FRS Guidance Line at 1-866-446-9377 (Option 2) for additional information.

*Additional taxes can be withheld if necessary. Please contact your Investment Provider if you wish to increase the amount of your withholding.

A Participant must start RMDs for their 457b Pre-Tax account on April 1^st of the calendar year following the year of reaching age 73*, then every year thereafter. However, if a Participant is still employed by the State of Florida when they turn 73*, they are not required to begin a distribution and can continue to make payroll contributions to the Plan. Please see your tax advisor for additional information.

RMDs do not apply to 457b Roth accounts during the life of the owner.

*The SECURE Act may impact certain employees. Please contact your Investment Provider for more information.

You cannot make an Unforeseeable Emergency Withdrawal from your 457b Roth payroll contributions.