Benefits - Deferred Compensation & Tax Deferred Annuities
(Voluntary Pre-Tax Benefits)
The State of Illinois Employees' Deferred Compensation Plan is a supplemental tax-deferred retirement plan for state employees. In 2020, employees under the age of 50 can defer up to $19,500 and employees age 50 or over can defer up to $26,000 per calendar year. The deferrals, together with any earnings, accumulate tax-deferred until the employee terminates service, dies, or incurs unforeseeable financial hardship. Once distributions begin, the distributed monies are fully taxable as ordinary income for federal tax purposes. The funds are never taxed by the State of Illinois.The Deferred Comp website is located at www.benefitschoice.il.gov. Once you are on this website, the Deferred Compensation icon is located (in grey) in the upper right hand corner of the front page. This is a very user-friendly website that gives a lot of information and has all the forms you need for enrollment, beneficiaries, rollovers, and changes.
457(b) Roth: The Roth provision under the State of Illinois 457 plan allows employees to make after-tax contributions to their account. Roth contributions provide a different tax advantage for retirement savings compared to traditional before-tax contributions. The balance of Roth contributions and any earnings are not taxed at the time of a qualified distribution.
Tax Deferred Annuities
A tax-deferred annuity is a voluntary program adopted by Southern Illinois University to help employees provide for retirement. In 2020, employees under the age of 50 can defer up to $19,500 and employees age 50 or over can defer up to $26,000 per calendar year. This elective fringe benefit is made available to employees of educational institutions and certain non-profit organizations as described in the federal income tax code (Section 403b of the IRS Code, 20 USC 403b). You save through payroll deduction, investing pre-tax dollars in choice accounts, reducing your taxable income. Investment earnings then accumulate and compound on a tax-deferred basis until you retire. The retirement investment strategy you select will hinge on a variety of factors, including your age, risk tolerance, how much you can afford to invest, and additional sources of income or assets when you retire.