Government Deferred Compensation

How Does the 457(b) Deferred Compensation Plan Work?

With a 457(b) deferred compensation plan, you postpone receiving (defer) a portion of your salary. It works like this:

• You decide, within certain Internal Revenue Code (IRC) limits, how much of your income you want to defer.

• Your employer will reduce your paycheck before withholding federal and, if applicable, state income tax by that amount and forward it to Voya on a regular basis.

• You decide how your contributions are invested, utilizing one or more investment options available in the plan.

• The contributions and any earnings that accumulate over the years are not taxed until you receive them. (Money distributed from the plan will be taxed as ordinary income in the year the money is distributed). That’s usually at retirement when you may be in a lower tax bracket.

• Your employer’s 457(b) deferred compensation plan has no effect on the benefits you will receive from Social Security. Your Social Security contributions and benefits (if applicable) will be based on your total pay, including the amounts paid into the deferred compensation plan.

Deferred compensation plans are authorized under Section 457 of the Internal Revenue Code. This section permits the tax-favored treatment of contributions for eligible employees of eligible governmental and tax-exempt employers. In order to maintain this tax-favored treatment, legislation requires that plans maintained by government employers hold all assets and income in trust, in custodial accounts, or in annuity contracts for the exclusive benefit of participants and beneficiaries.

Your employer’s 457(b) Deferred Compensation Plan Offers Important Benefits.

Tax-Deferred Contributions and Accumulation

By deferring compensation, you have the opportunity to:

• Lower your current federal and, if applicable, state income taxes because you postpone paying taxes on contributions and investment earnings until you withdraw them at retirement – a time when you may be in a lower tax bracket;

• Enjoy the opportunity for tax deferred compounding of your assets (see examples on the next page); and

• Potentially accumulate more for retirement than you would with an after-tax retirement savings plan, because more of your money has the opportunity to work for you.


Contribution Limits

The annual limit on elective deferrals for 2024 is the lesser of 100% of your compensation or $23,000 per year (adjusted annually in $500 increments). Exceptions to this general rule do exist and should be investigated. In addition, if you are an employee who is age 50 or older, you may take advantage of the “Age 50+” catch-up provision, allowing you to contribute an additional $7,500 of pre-tax dollars in 2024.


Variable annuities and mutual funds under a retirement plan are long-term investments designed for retirement purposes. Money taken from the plan will be taxed as ordinary income in the year the money is distributed. Account values fluctuate with market conditions, and when surrendered the principal may be worth more or less than its original amount invested. An annuity does not provide any additional tax deferral benefit, as tax deferral is provided by the plan. Annuities may be subject to additional fees and expenses to which other tax-qualified funding vehicles may not be subject. However, an annuity does provide other features and benefits, such as lifetime income payments and death benefits, which may be valuable to you.

You should consider the investment objectives, risks, and charges and expenses of the variable product and its underlying fund options; or mutual funds offered through a retirement plan, carefully before investing. The prospectuses/information booklets contain this and other information, which can be obtained by contacting your local representative. Please read the information carefully before investing.

Insurance products, annuities and retirement plan funding issued by (third party administrative services may also be provided by) Voya Retirement Insurance and Annuity Company. Securities are distributed by Voya Financial Partners, Inc. (member SIPC), One Orange Way, Windsor, CT 06095-4774. These companies are wholly owned, indirect subsidiaries of Voya Financial, Inc. (NYSE: VOYA). Securities may also be distributed through other broker-dealers with which Voya Financial Partners, Inc. has selling agreements.