SUBJECT: Deferred Compensation Plan (457 Plan)
There are two tax deferred retirement plans available to employees of state and local governmental entities. Both plans are similar with the following significant difference: 403(b) plan permitting employees to access their retirement plan assets without penalty upon reaching age 59 ; and a 457 Plan which allows distributions not based upon age but upon separation of employment. Presently Washburn offers a 403(b) Plan for its employees. The administration recommends the University provide employees greater flexibility in retirement planning by offering a 457 Plan in addition to the 403(b) Plan. This would allow employees the opportunity to make pre-tax contributions to either the 403(b) Plan or 457 Plan or both.
Changes in the Tax Code last year now permits universities to offer a Deferred Compensation Plan (457 Plan) in addition to the historically offered 403(b) Supplemental Retirement Plan.
FINANCIAL IMPLICATIONS: None
RECOMMENDATION: President Farley recommends adoption of a 457 Plan and approval of the proposed 457 Plan Document attached.
(date) Jerry B. Farley, President