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Edited by LM 4/11/22 Not Apprvd


Deferred Compensation Plan


Eligible employees can set aside a portion of their income either before or after taxes for a future date.
Effective as of January 1,

The State of Alaska 457 Deferred Compensation Plan (DCP) allows you to voluntarily set aside a portion of your income either before it is taxed or after it has been taxed. The amount set aside, plus any change in value (interest, gains and losses), is payable to you or your beneficiary at a future date. Upon becoming eligible to participate in the Plan, you may elect to defer your income on a pre-tax or post-tax basis. By doing so, you agree to reduce your salary by an agreed-upon amount. Any permanent employee, long-term non-permanent employee, elected official of the State of Alaska, or employee of a participating public or political subdivision is eligible to participate in the plan.

Plan Administrator

Empower Retirement Services processes all payments for the PERS/TRS Defined Contribution Retirement (DCR) plan, the Supplemental Annuity (SBS-AP) plan and Deferred Compensation Plan (DCP).

Empower Retirement Services

  • Account: akDRB.com
  • Local to Anchorage: (907) 276-1500
  • Empower Customer Service: (800) 232-0859
  • TTY: (800) 766-4952
  • Hours:
    Mon-Fri: 4 a.m. - 6 p.m., Sat: 5 a.m. - 1:30 p.m. AK
  • Email:
  • PIN: Request a PIN

Empower Automated Functions

  • Current account balance
  • Current interest rates
  • Current unit values or share prices
  • Current account balance by fund
  • Current fund allocation
  • Recent transaction history
  • Change investment fund allocation
  • Transfer among investment funds
  • Rebalance portfolio
  • Change a PIN
  • Order a copy of existing PIN

Plan Expenses

There are no front-end loads for investment. Your account has an annual record-keeping/administration fee of 0.17% (0.17 of 1%), which is assessed to your account monthly. In addition, the funds have annual investment expenses that vary depending upon the fund you choose. The returns are net of these costs. The plan may also charge fees for using specific plan features.

The Deferred Compensation Plan maximum amounts that can be contributed for is as follows:

  • The base maximum contribution is $20,500.
  • Participants are allowed to contribute an additional $6,500 in the years they turn age 50 or greater for an annual maximum of $27,000. This represents the annual allowable of $20,500 plus the additional $6,500.
  • The catch-up maximum is $41,000. This represents double the annual maximum of $20,500.

You may increase or decrease your contribution amount once per month.

Catch-Up Provisions

The catch-up provision is only available to participants as early as three years prior to their eligibility for normal retirement (either by age or years of service), and allows making up prior deferred compensation contributions that were less than their allowable maximum in years since January 1, 1979.

You may contribute under the catch-up provision for a maximum of three consecutive years. Once you elect catchup, if you do not utilize it for all three consecutive years, you cannot make up the amounts not utilized at a later time or with another employer.

If you are interested in knowing your total available catch-up balance or have any other questions regarding the catch-up provision, please email or call Empower Retirement above.

A comprehensive statement of your account will be mailed to you each quarter. If you prefer not to have your statements mailed, you can sign up to use the Online File Cabinet® for your account at the Empower Retirement Services website.

Before Tax Savings

Contributions to your account made under the pre-tax option reduces your taxable income for the year. These contributions and all associated earnings are then not subject to tax until you terminate employment and withdraw them.

After Tax Savings

The Deferred Compensation Plan has a Designated Roth 457 option that permits contributions to the plan on an after-tax basis. The Roth deferrals and associated earnings can be withdrawn tax-free in the future if the requirements for a qualified distribution are met. You may designate all or a portion of your contributions to the Designated Roth Option.

A Roth 457 is not a Roth IRA. Neither is a Roth 457 a separate plan; it is simply a way for employees to control the taxation of their deferred wages when they are disbursed in the future. This option allows employees to elect after tax salary deferrals into a Roth option. Roth elective deferrals are accounted for separately from the pre-tax contributions made to the plan. Distributions from the Roth 457 are tax free if the contributions have been in the Roth elective deferral account for at least 5 years and the participant is at least 59 ½.

The DCP is a participant-directed plan. This means that you choose from the investment options offered by the Plan. The providers of these investment options are selected by the Alaska Retirement Management Board. Investment options are described in detail in the Plan Information Booklet and in the individual Fund Overviews, which are available on the Empower Retirement Services website by selecting "Investment information" under the "Investing" menu.

Once contributions have been allocated among these funds (in whole percentages ranging from 0% to 100%), you may make transfers among existing fund options and allocation changes for future contributions once a day. There is no extra charge for daily changes. Funds may impose redemption fees, and/or transfer restrictions, on certain transfers, redemptions or exchanges if assets are held for less than the period stated in the fund’s prospectus or other disclosure documents. For more information visit the Empower Retirement System website or call Empower Customer Service at (800) 232-0859 toll-free. Changes may be made through Empower's website, by telephone via Empower Customer Service, through a client service representative, or in writing.

Existing Investment Funds

The Plan provides for twenty-seven investment alternatives. Carefully consider the investment objectives, risks, fees and expenses of the annuity and/or the investment options. Contact Empower Retirement for a prospectus, a summary prospectus and disclosure document, as available, containing this information. Read them carefully before investing.

  • Passive US Bond Index Fund
  • Stable Value Fund
  • JPMorgan SmartSpending 2015 R6
  • JPMorgan SmartSpending 2020 R6
  • U.S. Small-Cap Trust Fund
  • International Equity Fund
  • World Equity Ex-US Index Fund
  • Russell 3000 Index Fund
  • S&P 500® Index Fund
  • Alaska Target Retirement 2065 Trust
  • Alaska Target Retirement 2060 Trust
  • Alaska Target Retirement 2055 Trust
  • Alaska Target Retirement 2050 Trust
  • Alaska Target Retirement 2045 Trust
  • Alaska Target Retirement 2040 Trust
  • Alaska Target Retirement 2035 Trust
  • Alaska Target Retirement 2030 Trust
  • Alaska Target Retirement 2025 Trust
  • Alaska Target Retirement 2020 Trust
  • Alaska Target Retirement 2015 Trust
  • Alaska Target Retirement 2010 Trust
  • Alaska Long-Term Balanced Trust
  • Alaska Balanced Trust
  • State Street Treasury Money Market Fund – Inst.

Asset Allocation

  • Strategic Completion Fund



Your DCP offers access to three different levels of investment advisory tools and services called Reality Investing® Advisory Services. You can have Advised Assets Group, LLC (AAG), a wholly owned subsidiary of Empower Retirement and a federally registered investment adviser, manage your retirement account for you. Or if you prefer to manage your retirement account on your own, you can use online investment guidance and advice tools. These services provide a retirement strategy based on your investment goals, time horizon and tolerance for risk. There is no guarantee that participation in Reality Investing Advisory Services will result in a profit or that your account will outperform a self-managed portfolio.

The following transactions must be conducted through Empower Retirement Services:

  • Inactive and Retired Employees: Changing your address or your name. (Active employees: Contact your employer to change your address or name.)
  • Account Withdrawals: Empower Retirement Services processes all Plan payments. Empower Retirement Services should be contacted for information on how to complete disbursement forms and for the status of pending payments.
  • Hardship withdrawals

The Division of Retirement and Benefits is responsible for the overall administration of this plan. To contact the Juneau Division of Retirement and Benefits office, call (800) 821-2251, or (907) 465-4460 from Juneau.

  1. Distributions from your Pre-Tax Contributions:

    Funds may be withdrawn at any age in the event of:

    • Leaving State employment (including retirement)
    • Proven Unforeseeable Emergency (as defined by the Internal Revenue Code)
    • Death (after which your beneficiaries will take the withdrawal)

    There are no withdrawal fees or IRS penalties for any benefit payable. All funds are subject to federal income tax as they are paid out. DCP monies can be transferred to another governmental 457(b) plan, an IRA or any other qualified plan that accepts them. If you roll over any governmental 457 dollars to another type of plan or account, the withdrawals made prior to you reaching age 59½ may be subject to a 10% federal early withdrawal penalty upon distribution from the non-457 account.

  2. Distributions from your Post-Tax Contributions:

    Your Roth distributions are income tax-free if you withdraw your Roth contributions and any earnings after holding the account for at least five tax years and you meet one of the following:

    • You are at least age 59½.
    • You become disabled.
    • Death (after which your beneficiaries will take the withdrawal)

    If a distribution is made from your Roth 457 account before you reach age 59½ and it is not due to death or disability or you have not reached the five-tax-year period beginning with your first Roth contribution, you will owe income tax on any earnings the Plan distributes. Otherwise, you do not owe income tax on the Roth contributions that the Plan distributes because you made these contributions with after-tax dollars.

In-Service Distributions

The Division of Retirement and Benefits proposes to adopt amendments in the Alaska Deferred Compensation Program (DCP) Plan Document, dealing with new in service distributions for participants of the DCP. Under legislation that includes the SECURE Act, governmental 457(b) plan sponsors can now offer in service distributions to participants starting at age 59-1/2 (rather than the previous threshold of age 70-1/2) for plan years beginning after December 31, 2019. This allows participants who remain employed after age 59-1/2 the option of taking a distribution at any time. The SECURE Act also allows 457 plans to permit qualified birth or adoption distributions up to $5,000.

These amendments will update the 457(b) Alaska Deferred Compensation Program, implementing three new IRS approved distribution/withdrawal options:

  • Age 59-1/2,
  • A one time only Small Account, and
  • Birth or Adoption.

These options will make funds available to the qualified participant shortly before age 60, in preparation for retirement, administratively reduce the workload managing small, inactive accounts, and make funds available to parents of a new baby or a new adopted child.

Under the American Miners Act of 2019, portion of the legislation that includes the SECURE Act, governmental 457(b) plan sponsors can now offer in service distributions to participants starting at age 59-1/2 (rather than the previous threshold of age 70-1/2) for plan years beginning after December 31, 2019. This allows participants who remain employed after age 59-1/2 the option of taking a distribution at any time. The Alaska DCP has decided to adopt this provision to allow members to access their DCP account at age 59-1/2 regardless of employment status. The Division of Retirement and Benefits (Division) believes that by making this amendment, DCP participants can access their fund if desired or needed near the end of their careers to facilitate retirement planning.

Section 457(e)(9)(A) was added to section 457 under the Small Business Job Protection Act 1996 (SBJPA). This new section provides that the total amount payable to a participant under the plan will not be treated as made available merely because the participant may elect to receive such amount (or the plan may distribute such amount without the participant’s consent) if the amount in the participant’s account is less than the statutory dollar threshold and the participant has not availed themselves of small account distribution in the past. The Division believes that by making this amendment, DCP participants can reduce the administrative burden of rolling over or otherwise maintaining small accounts.

The SECURE Act allows 457 plans to permit qualified birth or adoption distributions (up to $5,000). The Division believes that by making this amendment, DCP participants can help parents defray the expenses of a new baby or an adoption.

Specifically, amendments will be adopted to clarify qualifications for the new in service distributions from the Alaska Deferred Compensation Program as of September 14, 2021, as follows:

  • Age 59-1/2 distribution: Current DCP participants who qualify for the new age 59-1/2 in service distribution must go online to the Custodian’s website and download the In-Service Age 59-1/2 application form. After completing and submitting to the Custodian, the application is processed and the in service distribution will be deposited as instructed by the participant. DCP participants may not make amounts deferred available to a participant earlier than:
    1. age 59-1/2,
    2. severance of employment,
    3. retirement,
    4. an “unforeseeable emergency” (457(b) version of a financial hardship),
    5. Required minimum distributions (RMDs),
    6. Qualified Domestic Relations Order (QDRO) pursuant to a divorce, or
    7. plan termination.
  • Small Account Distribution: DCP participants who qualify for the “small account” in service distribution must follow the steps previously shared for the age 59 1/2 in service distribution. Small account distributions may be authorized provided if:
    1. the amount does not exceed $5,000, and
    2. such amount may be distributed only if:
      1. no amount has been deferred under the plan with respect to such participant during the 2 year period ending on the date of the distribution, and
      2. there has been no prior distribution under the plan to such participant under this option.
  • Birth or Adoption Distribution: DCP participants who qualify for birth or adoption distributions must go online to the Custodian’s website and download an In-Service application form. After completing and submitting to the Custodian, the application is processed and the in service distribution will be deposited as instructed by the participant. A “Qualified Birth or Adoption Distribution” means a distribution made to a Participant within the one year period, beginning on the date on which a child of the Participant is born or on which the legal adoption by the Participant of an eligible adoptee is finalized.

You may comment on the proposed amendments by submitting written comments to:

  • Mail: Attn: Jim Puckett
    Alaska Division of Retirement and Benefits
    P.O. Box 110203
    Juneau, Alaska 99811-0203
  • Email:

Comments must be received no later than 5:00 p.m. on August 30, 2021.

If you are a person with a disability who needs a special accommodation to participate in this process, please contact Jim Puckett at (907) 465-3226 no later than Monday, August 23, 2021, to ensure that any necessary accommodations can be provided.

A copy of the proposed amendments and of material to be adopted by reference is available on the Alaska Online Public Notice System , the Division of Retirement and Benefits website, and by contacting Jim Puckett at P.O. Box 110203, Juneau, Alaska 99811-0203 or at .

After the public comment period ends, the Division of Retirement and Benefits will either adopt the proposed amendments or other provisions dealing with the same subject, without further notice, or decide to take no action. The language of the final amendments may be different from that of the proposed amendments. You should comment during the time allowed if your interests could be affected.

DCP Plan Document Article Being Implemented, Interpreted, or Made Specific: Articles V; (B), (D), (E), (F), (L), and VII; (A)

Fiscal Information: No increased appropriations are anticipated.

Receiving Your Distributions

When you qualify for a distribution, your account value may be applied to the distribution option(s) you choose:

  • Deferred payment until you have obtained the age of Required Minimum Distribution
  • Lump-sum payment (full or partial)
  • Five, 10 and 15 year period-certain annuity
  • Single life annuity
  • Single life annuity with 10 or 15 year period-certain
  • 50% or 100% joint/survivor annuity
  • Periodic payment
  • Direct rollover to an IRA or other qualified plan

You are encouraged to discuss rolling money from one account to another with your financial advisor/planner and to consider any potential fees and/or limitations of available investment options.

You may begin receiving funds immediately or defer receipt until no later than April 1 of the year following the later of the year in which you turn 72 or the year in which you retire. You will be allowed to take partial distributions, and there is no limit on the number of payments that can be taken; however, if you do not receive payment of your entire account, you must maintain a minimum $1,000 account balance.

Hardship Withdrawls

There are strict provisions for hardship withdrawals. They can be requested from Empower Retirement Services, but you must prove you are experiencing an unforeseen and extreme financial emergency and provide evidence demonstrating that you have exhausted all other reasonable alternatives. This includes stopping your deferrals and cashing out the maximum allowable annual/personal leave.

An unforeseeable emergency which results in a severe financial hardship can result from any of the following developments:

  • An illness or accident of the participant, the participant’s spouse, or the participant’s dependent;
  • The loss of the participant’s property due to casualty, including the need to rebuild a home following damage to a home not otherwise covered by homeowner’s insurance (such as a natural disaster); or
  • Similar extraordinary and unforeseeable circumstances arising as a result of events beyond the participant’s or beneficiary’s control;

It takes an average of one to two months to obtain all the necessary information for a hardship withdrawal. Payments are usually issued within two weeks from the date the withdrawal is approved by the Plan.

  1. General

    In the event of an unforeseeable emergency which is beyond the control of the Participant and which causes extreme financial hardship, a participant may request Empower Retirement Services to distribute all or a portion of the Participant's Deferred Compensation account. Such request shall be made by completing and submitting all required forms for this purpose. The Participant must, prior to his application, cease deferring compensation in accordance with Paragraph F of Article III. If the application for the payment is approved by Empower Retirement Services, payments shall be effective as soon as possible after the date specified in the Participant's application or the date of approval by Empower Retirement Services, if later.

  2. Unforeseeable Emergency Defined

    The term "unforeseeable emergency" is defined to be severe financial hardship to the Participant or of a dependent (as defined in IRC Section 152(a)) of the Participant, loss of the Participant's property due to a casualty or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The circumstances that will constitute an unforeseeable emergency will depend upon the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved.

    1. through reimbursement or compensation by insurance or otherwise,
    2. by liquidation of the Participant's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or
    3. by cessation of deferrals under the Plan.

    Examples not considered to be unforeseeable emergencies include the need to send a Participant's child to college or the desire to purchase a home.

  3. Demonstration of Need

    A Participant requesting a hardship withdrawal by reason of an unforeseeable emergency must clearly demonstrate that the circumstances being experienced were not under the Participant's control and constitute a real emergency which is likely to cause the Participant great financial hardship. Empower Retirement Services may require such medical, financial, or other evidence deemed appropriate to make a determination concerning the Participant's withdrawal request.

  4. Limit

    The withdrawal shall be limited to an amount sufficient only to meet the emergency and shall in no event exceed the value of the Participant's Deferred Compensation account. Any money remaining in the account shall be distributed in accordance with the provisions of this Plan.

  5. Method of Distribution

    The method of distribution of any allowed withdrawal shall be determined by Empower Retirement Services.

Employees leaving state service can request to have a final deferred compensation contribution taken on their final payroll check. Your final check will include payment of any unused personal/annual leave in addition to your final pay. Some employees prefer to reduce their tax liability by deferring income from their final check into their deferred compensation account.

If you want to request this deferral, please complete the DCP Final Pay Form , and return it to the Division of Retirement and Benefits via fax or as a PDF file email attachment as noted on the form to the .


For employees not participating in the catch-up provision of deferred compensation, the maximum total deferral for (including regular deferrals from normal payroll, leave cash-ins, and final check) is either $27,000 (for participants aged 50 and over) or $20,500 (for participants under age 50). Employees participating in catch-up may be eligible to defer as much as $41,000 in , depending on their prior deferred compensation deferrals. These dollar amounts may be adjusted each year by the IRS. Dollar deferrals are net (after deduction) of any required SBS and applicable Medicare deductions.

If you wish to defer the maximum amount (from both leave and pay) from your final check, you should check the top box on the form. The middle box should be used if you wish to defer a specific dollar amount (up to the maximum amount) from your final check.

If you wish to defer only the dollar value (net of any required SBS and applicable Medicare deductions) of your leave balance, you should check the bottom box on the form.

If you are not currently enrolled in the deferred compensation plan and wish to defer income from your final check, or if you have never used the catch-up provision of deferred compensation and wish to defer more than your age based limit noted above, please contact the Member Service Center.

A layoff separation is considered a termination of employment by the DCP and allows participants to withdraw their accounts once separated from employment. You are not required to remove your funds simply because you have separated. You may leave your contributions in the plan and continue your retirement savings in order to meet your goals for the future. Experts say most people will live on retirement benefits longer than they worked to earn them.

If you are planning on reinvesting your money, please be sure to compare the fees for the services you will receive. The DCP management and administrative fees are very low compared to the private sector.

If you must withdraw your DCP funds, you will need to consider the following:

  • You may elect to maintain your account, rollover all or a portion of your account to another qualified plan, or elect one of the plan’s payment options, which include full or partial lump sum withdrawal, periodic payments, and annuities.
  • DCP funds accrued through pre-tax contributions are taxable income as it is received, and the plan is required to withhold 20% for federal income tax. You may want to choose a method of payment that spreads your taxable account balance across tax years. If you made post-tax (Roth) DCP contributions, your withdrawal may not be taxable if it meets the criteria to be excluded from taxes.

Page Last Modified: 05/20/22 08:55:46

© State of Alaska || || drb.alaska.gov

DCP FAQs

What is a deferred compensation plan?

The Deferred Compensation Plan allows you to voluntarily set aside a portion of your income either before it is taxed or after it has been taxed. The amount set aside, plus any change in value (interest, gains and losses), is payable to you or your beneficiary at a future date. Upon becoming eligible to participate in the Plan, you may elect to defer your income on a pre-tax or post-tax basis. By doing so, you agree to reduce your salary by an agreed-upon amount. This amount may not exceed certain requirements (outlined below).

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Who is eligible to be in the plan?

Any permanent employee, long-term nonpermanent employee, or elected official of the State of Alaska.

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What type of plan is the DCP and when may a person join the Plan?

The Alaska Deferred Compensation Plan (DCP) is an eligible deferred compensation plan under Internal Revenue Code Section 457. Employees may join any time after they are eligible and complete the necessary enrollment forms.

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How do I enroll?

You may enroll directly on the Empower Retirement site (PIN required), or to request your PIN.

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Where can I find information for Advisory Service Fees, Plan expenses, Plan Payment Options, Tax Information, Account Tracking, and Other Details?
What are the transactions required through Empower Retirement Services?

The following transactions must be conducted through Empower Retirement Services:

  • Inactive and Retired Employees: Changing your address or your name. (Active employees: Contact your employer to change your address or name.)
  • Account Withdrawals: Empower Retirement Services processes all Plan payments. Empower Retirement Services should be contacted for information on how to complete disbursement forms and for the status of pending payments.
  • Hardship withdrawals
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Who is the Plan Administrator?

The Division of Retirement and Benefits is responsible for the overall administration of this plan. To contact the Juneau Division of Retirement and Benefits office, call (800) 821-2251, or (907) 465-4460 from Juneau.

Contact Us
What happens to my accrued personal leave if I leave state service on or before December 31, 2018?

If you do nothing else, the dollar value of your accrued personal leave will be paid out to you in your final paycheck. The amount paid to you will be subject to applicable taxes.

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How is the dollar value of my accrued personal leave derived?

In accordance with 2 AAC 08.045, personal leave balances are converted monthly to a cash value, by multiplying the hours accrued by the annualized hourly rate of pay for the pay period.

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Is there a way to defer paying taxes on my accrued personal leave?

Yes. If you participate in the State’s deferred compensation plan you can direct some or all of your leave (depending on what you have contributed so far in the tax year) to your deferred compensation account. You must submit a request to the Division of Retirement Benefits, Attention Natalya Khomyakova at . There is a deadline for submitting the request, however.

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What is the deadline for submitting a request to convert leave for deposit into my deferred compensation account?

Under the terms of the Alaska Deferred Compensation Plan, requests must happen in the month prior to termination. Therefore, if you know the month in which you plan to terminate state employment, you must submit the conversion request anytime during the prior month.

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What if I am not currently enrolled in the Deferred Compensation plan?

If you would like to enroll in the Deferred Compensation Plan you can either complete your enrollment online or you can fill out the enrollment form and submit it to Empower Retirement at the fax number listed on the form. If you need a pin number for the website you can contact Empower Retirement at (800) 232-0859.

Visit Site
When can I access my account?

You can access your account after you have terminated employment or there is an unforeseeable emergency (as defined by the Alaska Deferred Compensation Plan). When you qualify for a distribution, your account value may be applied to the distribution option(s) you choose. These options include:

  • Do nothing and defer payment until you have obtained the age of Required Minimum Distribution
  • Lump-sum payment (full or partial)
  • Five-, 10- and 15-year period certain annuity
  • Single life annuity
  • Single life annuity with 10- or 15-year period certain
  • 50% or 100% joint/survivor annuity
  • Periodic payment
  • Direct rollover to an eligible retirement plan as set forth in the Alaska Deferred Compensation Plan.

You may begin receiving funds immediately or defer receipt until to any date up to April 1 of the year after attaining age 70½. You will be allowed to take partial distributions, and there is no limit on the number of payments that can be taken; however, if you do not receive payment of your entire account, you must maintain a minimum $1,000 account balance.

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What if there is a change of administration?

The Division of Retirement and Benefits will provide information and group seminars on leaving state employment in November. Generally speaking, employees that wish to convert leave to deferred compensation have adequate opportunity to do that in November so long as their last day of service is in December. The Governor is sworn into office at 12 noon on December 3.

If, however, you believe you will terminate state service in December, you should consider converting personal leave in November. Leave cash in requests for the month of November must be submitted to the Division by November 30.

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What is the pre-tax/post-tax contribution option?

Pre-tax contribution option: Contributions to your account made under the pre-tax options reduce your taxable income for the year. These contributions and all associated earnings are then not subject to tax until you terminate employment and withdraw them.

Post-tax contribution option:The Deferred Compensation Plan has a Designated Roth Option that permits contributions to the plan on an after-tax basis. The Roth deferrals and associated earnings can be withdrawn tax-free in the future if the requirements for a qualified distribution are met. You may designate all or a portion of your contributions to the Designated Roth Option.

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What is the minimum and maximum amount I may defer?

The regular contribution limit for those UNDER age 50 is $19,000 in 2019. Members age 50 or older will be able to make additional contributions. The increased contribution amount is $6,000 for 2019.

You may defer a minimum of $50 per month ($25 each pay period).

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What is the “special catch-up” provision?

The catch-up provision is available to employees who are within three years of their normal retirement eligibility. Special catch-up allows you to make up for contributions you could have made during previous years of state employment but didn’t.

The special catch-up limit is double the regular contribution limit. For 2019, this could be up to $38,000.

You may contribute under the special catch-up provision for a maximum of three consecutive years. Once you elect to enroll in the special catch-up provision, if you do not utilize it for all three consecutive years, you cannot make up the amounts not utilized at a later time or with another employer.

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Can I change my contribution amount?

You may increase or decrease your contribution amount once per month.

What if I need to make investment changes?

You may make transfers among existing fund options and allocation changes for future contributions once a day. There is no charge.

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What are my investment options?

The Plan provides for twenty-seven investment alternatives. Once contributions have been allocated among these funds (in whole percentages ranging from 0% to 100%), money may be transferred across funds daily. Investment Options Detail Sheets and Investment Performance Monthly Reports are available on the Empower Retirement website

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How can I get help choosing my investment options?

Your Plan offers access to three different levels of investment advisory tools and services called Reality Investing® Advisory Services. You can have Advised Assets Group, LLC (AAG), a wholly owned subsidiary of Empower Retirement and a federally registered investment adviser, manage your retirement account for you. Or if you prefer to manage your retirement account on your own, you can use online investment guidance and advice tools. These services provide a retirement strategy based on your investment goals, time horizon and tolerance for risk. There is no guarantee that participation in Reality Investing Advisory Services will result in a profit or that your account will outperform a self-managed portfolio.

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How do Periodic Payments work?

The Periodic Payment option is one of the many available benefit payment options under the State of Alaska Deferred Compensation Plan. With Periodic Payments, you are able to enjoy benefit payments that are withdrawn directly from your account balance. You elect the amount and frequency of your payments. Your remaining account balance will continue to earn gains or losses associated with the funds your account is invested in.

Unlike life annuity options, Periodic Payment options provide NO guarantee of lifetime income. The benefit payments will continue only until assets are depleted. You should carefully review all your payout options before making a selection.

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What is the minimum amount I must withdraw?

The minimum payment to you must be an amount which meets the distribution requirements of the Internal Revenue Code, but can never be less than $50. Payments will be made at the necessary frequency to ensure the $50 minimum payment is met.

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What is the frequency of payments?

All payments are available on a monthly, quarterly, semi-annual or annual basis, so long as the $50 minimum is met.

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How will payments be made?

When a payment is due, the appropriate number of units will be redeemed to equal the payment amount. Because the unit values will vary from payment date to payment date, the number of units redeemed will vary accordingly.

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In what order are investment options liquidated?

Your investment options automatically will be liquidated on a pro rata basis. However, you may elect specific funds for payments to be drawn from as long as there are sufficient monies available.

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Who controls the assets during the payout phase?

You maintain control of investments of the account balance during Periodic Payment payouts.

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Are there additional expenses associated with Periodic Payments?

There are no additional expenses, but all plan expenses continue to apply (recordkeeping, investment management, etc.).

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May I change the benefit payment level?

Yes. You may change your payment structure at any time. You must always meet any minimum distribution requirements that apply by law.

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Can Periodic Payments be stopped and the balance moved to an IRA or other qualified plan?

Yes. You can decide to do a partial or complete transfer, or rollover, to an IRA or other qualified plan. However, once there, all the tax penalty rules that did not apply to a regular payment from a 457 plan (i.e., the 10% early distribution penalty for payments before 59-½) now apply to payments made from the other plan.

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What are some of the advantages and disadvantages of Periodic Payments?

Advantages:

  • You can transfer among all investment options available under the plan during the payout phase.
  • Payments before 59-½ are not subject to an additional 10% early distribution penalty.
  • You have maximum flexibility in the payment method. You can change the payment method at any time.
  • You can later decide to direct transfer or rollover your account to an IRA or other qualified plan.

Disadvantages:

  • You can outlive assets (unlike life annuity options).
  • Your payments may fluctuate.

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What is the death benefit?

The death benefit is the remaining account balance. No more payments will be made and there will be no death benefit when the account balance is zero.

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What is the Roth 457 option?

The Roth 457 option for governmental deferred compensation plans was authorized by Congress effective January 1, 2011. A Roth 457 is not a Roth IRA. Neither is a Roth 457 a separate plan; it is simply a way for employees to control the taxation of their deferred wages when they are disbursed in the future. This option allows employees to elect after tax salary deferrals into a Roth option. Roth elective deferrals are accounted for separately from the pre-tax contributions made to the plan. Distributions from the Roth 457 are tax free if the contributions have been in the Roth elective deferral account for at least 5 years and the participant is at least 59 ½.

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Who should consider the Roth 457 option?

For some employees, it might make sense to pay taxes on the DCP contributions now, rather than when money is withdrawn at retirement. Employees who would benefit are:

  • Employees who expect either their pay or tax rate to increase substantially over time. Being taxed at a lower rate today may be a better option.
  • Employees who expect to have relatively higher plan account investment earnings or to otherwise end up with a higher amount of money set aside for retirement, may benefit from paying taxes up front or just having a pool of tax-free money to draw on in the future.
  • Younger employees who have a longer retirement horizon and more time to accumulate tax-free earnings under a Roth 457.
  • Older employees who may want to leave tax-free money to their heirs in the future.
  • Employees may want the option of not taking required withdrawals at age 70 ½ by rolling their Roth 457 to a Roth IRA.

The Roth 457 option gives employees more flexibility to save for retirement and provides control over when contributions, and retirement income, will be subject to federal income tax.

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Can employees contribute to both pre-tax and Roth 457 post-tax basis at the same time?

Yes, but the Roth 457 contributions count towards the IRS limitations on deferred compensation contributions. Roth 457 contributions can either replace or complement traditional pre-tax contributions subject to the IRS limits of $18,000 per year (2015) plus an additional $6,000 in 2015 if the employee is age 50 or older at the end of the year.

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Once contributions are made to the Roth 457, can they be moved to the pre-tax account?

No. There can be no mixing of the two types of contributions.

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Does this affect an employee's ability to contribute to a Roth IRA?

No. Contributions to a Roth 457 have no effect on contributions to a Roth IRA.

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Is there a special fund the Roth 457 contributions are invested?

No. Employees may invest Roth 457 contributions in any of the present fund options available in the Alaska Deferred Compensation Plan.

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Are there special withdrawal options for the Roth 457 contributions?

No. The disbursement options remain the same for Roth 457 contributions. Earnings on the Roth 457 contributions will not be subject to taxation, however, if the employee is at least age 59 ½ and has held the Roth 457 account for 5 years or more.

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How is the 5-year period of participation calculated?

The 5-year period of participation begins on the first day of your taxable year for which you first made designated Roth contributions to the plan. It ends when five consecutive taxable years have passed.

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Does the DCP offer an in-plan Roth 457 rollover?

An in-plan Roth rollover is a rollover from your pre-tax contributions in DCP to the post-tax Roth 457 option. At this time the plan does not allow for this type of rollover.

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A Roth IRA has income restrictions. Do these restrictions apply to the Roth 457?

No, there are no limits on your income in determining if you can make designated Roth 457 contributions. Of course, you have to have sufficient salary from which to make the deferral, and you are subject to the IRS limit on the amount of contributions per year.

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Can I make a designated Roth contribution for my spouse if my spouse has no earned income as permitted with a spousal IRA account?

No, you cannot contribute to a governmental Roth 457 for your spouse.

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Can I make age-50 catch-up contributions to the Roth 457 option?

Yes, provided you are age 50 or older by the end of the year.

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Can I roll my Roth IRA into this new Roth 457 option?

No, the IRS does not allow this type of rollover.

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Are the contributions in my Roth 457 option subject to the IRS required minimum distribution (RMD) rules?

Yes. Designated Roth accounts are subject to the RMD rules. A participant must begin taking annual distributions from the account by either age 70 ½ or retirement, whichever is later.

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Employee FAQs