Deferred compensation funds moved to social security?

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Is it true that my deferred compensation I have saved will not be available to me when I retire but will be rolled into my social security? Or if I wish to draw it out when I retire I will be penalized? Thanks.
Regarding the first part of your question, the answer is no. There is no relationship between amounts you have saved through the deferred compensation plan and social security.
Distributions from your deferred compensation plan accounts will be subject to ordinary income tax. There are also circumstances under which distributions from the incentive portion of the program (state match) or from BackDROP amounts rolled over to the deferred compensation plan may be subject to a premature distribution penalty equal to 10% of the amount of the distribution. If you terminate state employment before age 55 and withdraw amounts from the state match or BackDROP rollover portion of the plan before reaching age 59 ½, those amounts may be subject to the 10% penalty. Distributions from the account holding your own contributions to the deferred compensation plan are never subject to a premature distribution penalty.
Since these rules can be complicated, we would encourage you to talk to a representative of the deferred compensation plan at the plan’s Information Line (1-800-392-0925). You may also make an appointment to visit with a Local Deferred Compensation Plan Consultant by calling the same Information Line number and pressing “option 2.” You may also want to talk to a tax advisor or financial planner before making a final decision.
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Is my retirement a 401k

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While I’m working and have money invested in ING through the Deferred Comp, is that investment a 401K?When I retire and want to continue my deferred comp with my backdrop in ING, will that be considered a 401K?
The fact that there is considerable confusion about tax deferred savings arrangements is completely understandable. These plans get their common names from the sections of the Internal Revenue Code under which they are established and if you’ve looked at the Code in any detail you will note that it was not designed for ease of understanding. Initially there were significant differences between the rules applicable to the various plans and, while they have moved closer to each other over the years, some differences remain.
First of all, section 401(k) plans cannot presently be established by governmental employers. Consequently, 401(k) plans are not an issue for State of Missouri employees.
MOSERS is a section 401(a) defined benefit plan.
The State of Missouri Deferred Compensation program consists of two plans.

  • A 457 plan which is where your contributions are deposited.
  • A 401(a) defined contribution plan which is for the state’s incentive payments and rollovers, such as your BackDROP payment.
The tax laws do not permit rolling distributions over from a 401(a) plan (like MOSERS) to a 457 plan (like where your own contributions are held in the deferred compensation program). However, rollovers are allowed between 401(a) plans. Consequently, you may roll your BackDROP distribution from MOSERS over to the 401(a) component of the deferred compensation program.
There is one thing you need to be aware of regarding distributions from a 401(a) defined contribution plan (which, as mentioned, is where your BackDROP amount would be held if you do roll it over to the deferred compensation program). If you terminate employment with the state prior to age 55, amounts withdrawn from the 401 (a) account (including your BackDROP rollover) before age 59 ½ would be subject to a 10% premature distribution tax in addition to ordinary income tax.
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Timing of BackDROP payments

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If you retire on Jan 1st and your last day of work is Dec 31st, which month will you receive your backdrop? I am asking for tax purposes to know if it would be income for Dec or Jan of the next year.
BackDROP payments for someone retiring January 1 will be made on the last working day of January. When the distribution is taxable depends on how you elect to receive the payment. 
  • If you elect the cash option to receive your BackDROP distribution, it is taxable in the year in which you receive the payment. Under the cash option, 20% of the total amount is withheld for federal income tax purposes.
  • If you elect to roll your BackDROP distribution into the state’s deferred compensation plan, a traditional IRA, or eligible employer plan, your payment will not be taxed in the year of the rollover and no income tax will be withheld in connection with the rollover. Distributions from the rollover account will be taxed in the year(s) in which the distributions are received.
Detailed information regarding taxes for your BackDROP distribution may be found in our Special Tax Notice. A copy of this brochure will be mailed to you at retirement with your Retirement Election Form. Print Friendly and PDF

Advance notice required for retirement

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I was informed today that because I did not give the personnel office here at my institution (SCCC) 30 days notice that I would be retiring on 1 Nov 08 that this could cause a delay in receiving my retirement check at the end of the month. Can you tell me if this is a true statement? If it is, what options do I have? By policy, I am required to give a 10-day notice informing them of my intentions and that was submitted.
When you will begin receiving a monthly retirement benefit is determined by the following:
  • The date of retirement listed on your Application for Retirement.
  • The timely completion of MOSERS’ 2-step retirement process.
For a November 1 date of retirement, you must submit your Application for Retirement to MOSERS by September 30 and your Retirement Election Form by October 31.
Since your personnel office representative was not aware of your intent to retire until the end of October, they may have been concerned that you did not meet the Sept. 30 MOSERS application deadline. As long as the application for retirement and the retirement election form are received before the deadlines, you will receive your benefit payment at the end of November.
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