Who is Voya Financial®?_
Voya is a leading provider of deferred compensation education, administration and investment services to government plan sponsors and participants. We have serviced government retirement plans since 1972 and currently provide investment and/or administrative services to more than 4,300 cities, counties and municipalities. We have provided services to the City of Portland since 1982.
What is a 457(b) deferred compensation plan? +
A 457(b) 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 pre-tax basis, and any earnings are tax-deferred. Taxes are due when money is distributed from the plan. The amounts accumulated on your behalf are distributed at retirement, or due to another qualifying event, such as severance from employment or death. For additional information regarding the City’s 457 Plan, please see the Plan Overview section.
Do the contributions I make to the 457 Plan impact my retirement or Social Security?+
No. Your contributions to the 457 Plan have no effect on the calculation of salary for purposes of computing other benefits such as retirement and Social Security.
How do I increase or decrease my contributions to the 457 Plan?+
In order to change your contribution amount, you will need to complete a Participation Agreement that authorizes payroll deductions for the new amount. This form must be returned to the City. As a participant, you are permitted to change your contribution amount or percentage once per month. Forms for changes must be received by the Treasury Office by the 15th of the month prior to the month in which the modification is to be effective. For example: forms received by August 15 will become effective the first pay day in September.
If I am receiving accumulated vacation and sick leave compensation, can I elect to defer this compensation into the 457 Plan?+
No. Such amounts are not eligible for deferral under the City’s 457 Plan.
Can I stop contributing to the 457 Plan at any time?+
Yes. You will need to complete a Participation Agreement reducing your contribution to zero at least 2 weeks prior to the date on which you desire the revocation to be effective. This form must be returned to the City. The amounts previously contributed will remain in the Plan until you become entitled to a distribution under the Plan provisions.
What happens if I take a leave of absence from the City without Pay?+
You will no longer be eligible to participate in the Plan and have compensation deferred while on an unpaid leave of absence. You will be able to resume participation upon returning to pay status with the City. If your leave of absence exceeds one year, you will need to complete new enrollment paperwork upon your return to pay status.
Can I rollover into the Plan?+
Yes. The Plan permits you to roll over benefits from another employer-sponsored eligible retirement plan or traditional IRA. In order to roll over benefits into the Plan, the City requires that you complete an Acknowledgement Form, available on the City’s website by clicking here.
Note that amounts rolled into a government 457(b) plan from another plan type (including a traditional IRA) would be subject to the 10% premature distribution penalty tax if distributed prior to age 59½ (unless an IRS exception applies).
When can I receive a distribution of my benefits under the 457 Plan?+
Distributions are allowed only upon incurring a “triggering event.” Triggering events are retirement, severance from employment with the City, death, attainment of age 70½, the occurrence of an approved unforeseeable emergency, or if your total account balance under the Plan does not exceed $5,000 and certain conditions are met. Refer to the Plan Highlights section of this website for specifics.
Can I withdraw funds from the 457 Plan while still employed with the City?+
In accordance with Federal Regulations, payment prior to severance from employment is only permitted if you qualify for an unforeseeable emergency withdrawal or if your account balance does not exceed $5,000, you have not contributed to the 457 Plan for two years prior to this distribution, and you have not previously received this type of withdrawal.
What do I need to do when I leave City service and become entitled to a distribution from the Plan?+
When you sever City employment, you are entitled to a distribution from the Plan. If you would like to receive a distribution, you will need to complete a Termination/Distribution Request Authorization form that is available by calling Service Center at (800) 584-6001.
What are my options when I am entitled to a distribution? +
You can choose from several options:
- Postpone any decision on the payment of benefits to a future date (no later than the April 1 following the calendar year in which you attain age 70 ½ or separate from service, whichever is later),
- Receive your benefits immediately, under one of the distribution options available under the Plan (please refer to the Plan Highlights section for the available distribution options), or •
- Rollover your benefits into another employer-sponsored, eligible retirement plan (an eligible retirement plan is a 401 qualified plan, a 403(b) tax deferred annuity program, or another government 457(b) deferred compensation plan) or traditional IRA.
Please note that under the Plan, distribution of your account can begin no earlier than 31 days following your severance from employment.
Once I choose a payment method, can I change how I would like to receive my benefits?+
Yes. If at a later date you decide your existing payment option may not be appropriate for your current situation, you may make a change. (Please note: you cannot make a change if you previously elected an annuity payment option.)
When am I required to begin receiving distributions?+
The IRS requires that distributions under a 457 plan begin no later than the April 1st of the calendar year following the calendar year in which you attain 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 penalty is imposed on the required amount that was not timely distributed. These rules are referred to as IRS Required Minimum Distribution (RMD) requirements.
What is a systematic withdrawal option (SWO)? How and when are benefits paid under SWO?+
A systematic withdrawal option, or SWO, is one of the forms of periodic payment options available for the distribution of your benefits under the Plan. Under SWO, you elect whether to receive your benefits in a specified amount or over a stated period of time, subject to certain requirements. Once your election is made, Voya will pay your installment payments automatically in the method you select. You may choose to receive benefits monthly, quarterly, semi-annually or annually. While you are receiving your SWO payments, you are still able to direct the investment of amounts remaining in your Plan account. You may change the amount and timing of your SWO payments, as long as the minimum requirements are met and you continue to receive the Required Minimum Distributions under the Plan.
Can I rollover my benefits to another plan or IRA?+
Yes. At retirement or severance from employment, you are permitted to rollover your benefits to another employer-sponsored eligible retirement plan or traditional IRA.
All distributions are eligible for rollover except for:
- An unforeseeable emergency withdrawal;
- IRS Required Minimum Distributions payable on or after you attain age 70½ ;
- Periodic payments made over your life or a specified period of 10 years or more.
- Amounts rolled from the 457(b) Plan to another plan type would be subject to any applicable 10% premature federal penalty tax if distributed prior to age 59½ (unless an IRS exception applies).
Please contact our local office in Portland at (503) 937-0355 or toll-free at (800) 238-6281 for additional information on distributions and eligibility for rollover. To request a rollover, you will need to complete a Termination/Distribution Request Authorization form, available by calling Customer Service at (800) 584-6001.
When am I subject to taxation? +
All of the payments you receive from the 457 Plan are subject to Federal and State income taxes when paid.
Federal income tax withholding will apply to your payments, as described below, based on whether you are eligible to rollover the distribution.
- If you receive a distribution that is eligible to be rolled over, a mandatory 20% will be withheld for federal tax.
- If you receive a distribution that is not eligible to be rolled over, 10% for federal tax will be withheld at the time of payment. However, you may elect to have no withholding withheld.
Amounts distributed from the Plan are not subject to the 10% federal penalty tax if distributed prior to your attaining age 59½. However, if you have previously rolled over amounts from a plan (including a traditional IRA) other than a government 457 plan, such rollover amounts will be subject to this 10% federal penalty tax if distributed prior to attaining age 59½, unless an IRS exception applies.
Voya Financial® does not offer legal or tax advice. Please seek the advice of your own legal or tax advisor prior to making a tax-related investment decision.
I have recently been divorced. How will amounts awarded to my former spouse be taxed? +
Amounts awarded and paid to your former spouse as a result of a divorce, pursuant to a qualified domestic relations order (QDRO), will be taxable to your former spouse.
How do I obtain forms for an unforeseeable emergency withdrawal?+
When you incur an unforeseeable emergency under the 457 Plan, you must complete a City of Portland Hardship Withdrawal Application and a Voya Withdrawal Request Authorization package. For further assistance, call our Portland Office at (503) 937-0355 or toll-free at (800) 238-6281. Your local representative can answer any questions you have regarding applying for a withdrawal. Additional details on unforeseeable emergency withdrawals are available in the Plan Highlights section of this site.
How do I change my beneficiary under the Plan?+
You will need to complete a new Beneficiary Designation Form to change your beneficiary designation. The completed form should be returned to the City. For a copy of the form, please click here to be redirected to the City’s website.
What happens if I do not designate a Plan beneficiary?+
If you do not name a beneficiary (or if your beneficiary dies before you), death benefits will be paid to your estate. Refer to the Plan Highlights section for specifics.
What happens if I leave City service for military duty and then return to work?+
The 457 Plan includes specific provisions that allow re-employed military personnel to receive the same benefits under the Plan that they would have been entitled to had they remained in City service throughout the period of military service. To learn more, please contact the City Treasury Office, or call our Portland Office at (503) 937-0355 or toll-free at (800) 238-6281.