Eligibility
The Plan is a voluntary plan available to all employees of the City and County of Honolulu (“City and County”), including contracted employees as long as you work a minimum of 20 hours per week and 90 days per year.
Contributions
Contributions under the Plan are made by participants through a reduction in salary. To participate, you are required to contribute a minimum of $25.00 per pay period.
Under the Plan, the maximum annual contribution amount is set by Internal Revenue Service (IRS) guidelines on a yearly basis. You may view the current limits here.
You may be eligible for increased contributions: During the three consecutive years prior to attaining Normal Retirement Age under a special catch-up provision.
On and after you attain age 50 under an age 50+ catch-up provision.
Timing of Distributions
Distributions are allowed only upon severance from employment, attainment of age 73, death, or the occurrence of an unforeseeable emergency, which are considered to be triggering events. The Plan also includes a provision allowing the in-service distribution of accounts that do not exceed $5,000 if: 1) you have not made any contributions to the Plan during the prior two years; and 2) you have not received this type of in-service distribution in the past.
The Internal Revenue Service (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 73 or separate from service, whichever occurs later. If you fail to receive the minimum required distribution for any tax year, a 50% federal excise tax is imposed on the required amount that was not timely distributed. These rules are referred to as IRS minimum required distribution requirements (MRD).
Payment Options
Payment Options for Separated Employees
When you are eligible to receive a distribution under the Plan, you have a variety of payment options. Please call our Honolulu Service Center for additional information on distributions or to request a distribution form. These payment options include:
Systematic withdrawal of your account
- Specified Period- not less than 3 years and no more than your life expectancy.
- Specified Amount- cannot be more than 20% of your account.
- Payments can be monthly, quarterly, semi-annually or annually.
Deferral of all or a portion of your benefits to a later date
- You can choose to postpone the payment of your benefits and leave your benefits in the Plan for distribution at a later date.
- The latest date to which you can defer payments is the April 1st of the year following the year you reach age 73, or April 1st of the year following the year you retire, whichever is later.
Lump sum, or partial lump sum distribution in combination with other options
- Take all or a portion of your account balance in cash.
Annuity Options
- Choose from a variety of annuity options including a joint and survivor annuity, life annuity and life annuity with period certain.
Rollover into Another Eligible Retirement Plan
- Your distribution can be rolled over into a 401(a), 401(k) 403(b) or other governmental 457(b) plan or a traditional IRA.
Compare your options for differences in cost, benefits, charges and other important features before you rollover assets. You may want to consult your legal or tax advisors.
All distributions are eligible for rollover except for: 1) an unforeseeable emergency withdrawal; 2) IRS minimum required distributions payable on or after you attain age 73; and 3) periodic payments made over your life or a specified period of 10 years or more.
Death Benefits
Upon your death, benefits would be payable to the beneficiary(ies) that you designated under the Plan. If you have not designated a beneficiary, payment of death benefits will be made to your estate. Your beneficiary will be entitled to select from a variety of payment options, which are generally the same options that would have been available to you (and are described in the “Payment Options” section of this website above). Your beneficiary must notify Voya of your death and make a payment election in accordance with the Plan. Current and complete beneficiary records are critical to ensuring any remaining benefits are paid according to your wishes. If you have not yet designated a beneficiary or want to confirm your current elections, please contact the Honolulu Service Center.
Taxation
All of the payments you receive from the Plan are subject to federal and state income taxes. Federal income tax withholding will apply to your payments, as described below, based on whether you were eligible to rollover the distribution.
- If you receive a distribution that was eligible to be rolled over, a mandatory 20% will be withheld for federal tax purposes at the time of payment.
- If you receive a distribution that was not eligible to be rolled over, 10% federal tax will be withheld at the time of payment. However, you may elect to have no withholding withheld.
Amounts distributed from a 457 plan are not subject to the 10% federal penalty tax if distributed prior to attaining age 59½. However, if you have previously rolled over amounts from a plan other than a governmental 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. IRS exceptions include payments made:
- to your beneficiary as a result of your death;
- upon your severance from employment/retirement on or after you attain age 55;
- in substantially equal amounts over your life/life expectancy; or
- as a result of your total and permanent disability.
Voya does not offer tax or legal advice. You should consult with a tax advisor and /or tax attorney concerning your personal situation before making a financial / investment decision.
Unforeseeable Emergency Withdrawals
Information on Unforseeable Emergency Withdrawals
Internal Revenue Code (IRC) Section 457(b) defines an unforeseeable emergency as a severe financial hardship to the participant or the participant’s beneficiary (collectively referred to as the “account holder”) resulting from:
An illness or accident involving you, your beneficiary, the spouse of you or your beneficiary or a dependent (as defined by the IRS) of you or your beneficiary;
- The loss of your or your beneficiary’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 result of a natural disaster); or
- Other similar extraordinary and unforeseeable circumstances arising as a result of events beyond your or your beneficiary’s control.
- Even if the account holder meets the above requirements, this does not mean that he/she will be able to withdraw funds from the Plan. Withdrawals are permitted only to the extent the hardship cannot be relieved: (1) through reimbursement or compensation by insurance or otherwise; (2) by liquidating your assets (to the extent this would not itself cause severe financial hardship); or (3) by stopping deferrals under the Plan. Also, participants will not be allowed request an unforeseeable emergency once a distribution has begun.
Situations that may constitute unforeseeable circumstances include:
- The imminent foreclosure of or eviction from the participant’s or beneficiary’s primary residence.
- The need to pay for medical expenses, including non-refundable deductibles, as well as the cost of prescription drug medication.
- The need to pay for the funeral expenses of a spouse or dependent (as defined by the IRS).
- Only the amount reasonably necessary to meet the emergency need is available for withdrawal.
Plan Overview
For an overview of the Plan, please review the City and County’s Program Highlights brochure.