Frequently Asked Questions
Deferred Compensation
Wisconsin
Deferred Compensation Program Web Site
Online Video: Wisconsin
Deferred Compensation
What is the Wisconsin Deferred Compensation
Program?
The Wisconsin Deferred Compensation Program (WDC) is a supplemental
retirement savings program authorized under Section 457 of the Internal
Revenue Code (IRC). The WDC was created by Wisconsin Laws of 1981
Chapter 187 and established in 1982 for state employees; it has
been available to local employers since 1985.
You have two options for making contributions:
- After-tax Contributions Through the Roth Option: When you choose
the Roth option, you pay taxes on the money when you contribute
it to the account. As long as you meet certain requirements, when
you retire all distributions from your Roth account are tax free.
For more information on the Roth option, please go to the WDC's
Roth web page.
- Before-tax Contributions: Under this option you will not pay
taxes on your contributions when you make them. You pay the taxes
when you take a distribution from your account, which is usually
during retirement.
Who is eligible to participate?
All state and university employees are eligible to participate
in this benefit program. The employees of the approximately 850
local government and school district employers that have adopted
the WDC are also eligible.
What are the benefits of this program?
The WDC allows eligible employees an opportunity to save more toward
retirement. You may defer up to the lesser of 100% of your gross
income or $17,000 in 2012.
I'm getting close to retirement. Does
the WDC provide any options for extra savings?
Yes, there are two catch-up provisions that allow individuals nearing
normal retirement age to increase their deferrals:
- the age 50+ catch-up provision allows a participant who is at
least age 50 to defer up to $22,500 annually. You may use this
provision to make up some or all of any deferrals you did not
make in previous years. If you made the full amount of deferrals
you were eligible for in previous years, you may not use this
provision; and
- the special 457 catch-up provision allows participants within
three years of normal retirement age to contribute up to an additional
$17,000, for a total of $34,000 in 2012.
If you are eligible for both the over age 50 catch-up provision
and the special 457 catch-up provision, you may use whichever of
the two catch-up limits that produces the largest dollar amount,
but not both. Click here for more on these catch-up
options.
How is the WDC administered?
The Department of Employee Trust Funds and the Deferred Compensation
Board have statutory authority for program administration and oversight.
The Board contracts for administrative services (marketing, record
keeping, daily program administration) through a competitive bid
process. Great-West Retirement Services is under contract to provide
these services through at least November 30, 2015.
How are my deferrals invested?
Currently, 23 core investment options are available to participants.
These options include:
- Two fixed interest options;
- Three commingled funds;
- Twelve mutual funds;
- Six lifecycle funds; and
- One self-directed brokerage option.
Investment choices range from conservative to aggressive and include
both actively managed and index funds.
How are the investment options selected?
The Deferred Compensation Board selects and monitors the investment
options offered by the WDC. The Board annually reviews the performance
of the investment options offered to determine if they continue
to meet established benchmarks. Options that are determined to be
no longer acceptable may be removed from the WDC and new options
may be added.
Can I make changes to my account?
The WDC is as flexible as federal tax law allows. You may change
the amount of your deferrals at any time, redirect deferrals to
other investment options offered by the WDC, and exchange existing
account balances from one option to another subject to the excessive
trading policy.
Can I roll dollars in or out of my
account?
Yes, you may roll dollars from a traditional individual retirement
account (IRA), a 401(k) or 403(b) plan into the WDC. Likewise, if
you cease working for a WDC-eligible employer, dollars from your
WDC account can be rolled out of the WDC into these programs and
may be rolled out to a Roth IRA account as well. Dollars rolled
out of the WDC will be subject to the tax rules of the new plan.
How can I enroll in the WDC or make
changes to my account?
Plan representatives are available via telephone to assist you
between 7:00 a.m. and 7:00 p.m. every work day of the year. The
WDC administrative office is located
at:
Wisconsin Deferred Compensation Program
5325 Wall Street, Suite 2755
Madison, WI 53718-7982
Telephone: 1-877-457-9327
E-mail: wdcprogram@gwrs.com
TTY: 1-800-766-4952
FAX: (608) 241-6045
You can access an automated voice response telephone system by
calling 1-877-457-9327 on a touch-tone telephone. This system is
available seven days a week, 24 hours a day. You can obtain personal
account information, execute transactions and obtain past investment
performance information on the WDC's options. You can also
get information about the WDC or make changes to your accounts at
www.wdc457.org.
How often will I receive a statement
of account?
You will receive an itemized participant statement, newsletter,
and investment performance report within 20 days of the end of each
quarter.
Is there a cost to participate in
the WDC?
Annual participant fees currently in effect are as follows:
If Participant Balance
is Between: |
Fee Per Month / is: |
Fee Per Year / is: |
$0 to $5,000 |
$0.00 |
$0.00 |
$5,001 to $25,000 |
$1.00 |
$12.00 |
$25,001 to $50,000 |
$2.00 |
$24.00 |
$50,001 to $100,000 |
$4.00 |
$48.00 |
$100,001 to $150,000 |
$5.50 |
$66.00 |
Funding for program administration is provided by participant fees
and reimbursements from the investment providers. State funds are
not used for the administration of the WDC.
The Board annually reviews administrative revenues and expenses
and adjusts participant fees as necessary.
When can I access my WDC funds?
Distributions from your account are available at:
- termination from service;
- retirement;
- death; or
- unforeseen financial hardship situations, as defined by the
Internal Revenue Code.
After you terminate employment or retire, you may elect a distribution
date anytime up to April 1 of the calendar year following the year
you reach age 70½ or the year you terminate employment, if
later.
What type of distribution options
are available?
You may receive your distributions as:
- a lump sum payment of your full or partial account balance;
or
- periodic ongoing payments (monthly, quarterly, semi-annually
or annually).
Can I use my WDC account to purchase
creditable service in the WRS?
Yes. If you are eligible under the WRS to purchase service, you
may use your WDC account balance for this purpose. See Buying
Creditable Service ET-4121 for more information.
Where can I find more information
on the WDC?
Plan representatives are available via telephone from 7:00 a.m.
to 7:00 p.m. to assist eligible employees and participants every
work day of the year. The administrative office is located
at:
Wisconsin Deferred Compensation Program
5325 Wall Street, Suite 2755
Madison, WI 53718-9327
Telephone: 1-877-457-9327
E-mail: wdcprogram@gwrs.com
TTY: 1-800-766-4952
FAX: (608) 241-6045
|
