North Carolina 457(b) Deferred Compensation Plan
The North Carolina 457(b) Deferred Compensation plan is sponsored by the State of North Carolina and governed by the Department of the State Treasurer. The plan administrator for this program is Empower. The 457(b) is a supplemental retirement plan that allows employees to set aside payroll-deducted contributions on a pre or after-tax basis.
Pre or after-tax contributions may be invested in fixed and variable accounts under this plan. Account contributions and earnings are required by law to be held in a separate trust for the exclusive benefit of participants and their beneficiaries.
All permanent and temporary employees who are subject to FICA withholdings are eligible to participate (students are not eligible).
Due to plan rules with Empower, you cannot enroll or change contributions to the Empower NC 457 through ConnectCarolina. You must use the Empower Portal at myncplans.empower-retirement.com/participant/#/login. Empower then sends a file to UNC for the deductions.
The annual contribution limit to the 457 (b) plan is $23,000. You may be eligible for a catch-up contribution of an additional $7,500 if you are 50 or older, or will turn 50 during the current calendar year. For employees age 50 or older the maximum contribution amount is $30,500.
As an alternative to the age 50 catch-up, a participant is eligible to defer up to twice the contribution limit in effect for the three years preceding the employee’s normal retirement age (subject to eligibility). You should discuss this with your financial advisor or tax consultant to determine if you are eligible to take advantage of this rule.
Generally, distributions from a 457(b) plan can be made when an employee severs employment, becomes disabled or dies. In most cases, payments received from a 457(b) account are taxed as ordinary income unless in an after-tax 457 plan.