State of Delaware Deferred Compensation: Whats new in 2002
What is the Deferred Compensation Program?
The State of Delaware Employee's Deferred Compensation Plan and Match Plan provide state employees with a means of building wealth for their futures in a flexible, easy to use and, best of all, tax-deferred environment.
The Deferred Compensation Program, operated pursuant to section 457 of the Internal Revenue Code, provides approximately 230 investment options from Money Market Funds to Aggresive Stock Funds at no administrative cost to participants. Included in this group are six "life cycle" funds. Designed with a simplified approach in mind, these life cycle funds are actively managed to provide the right asset mix at the right time in a participant's life, adjusting from a more aggressive to a more conservative porfolio over time. What's New in 2002?
On January 1, 2002, the new federal tax law, The Economic Growth and Tax Relief Reconciliation Act, will take effect. Some of the highlights are:
A).The limit on an employee's pre-tax contributions is increased to $11,000 in 2002, increasing over five years to $15,000 in 2006. The percentage of income limit is also raised to 100% of taxable salary.
B). Distributions from any defined contribution arrangement, 401(k), 403(b), 457, etc., will be eligible to be rolled over to any other defined contribution arrangement.
C). Retiring participants will no longer be required to set a postponement date certain for their distirbution.
D). Catch-up provisions will include a phased in catch-up additional contribution for those age 50 and older going from $1,000 per year in 2002 to $5,000 per year in 2006, and an alternative three year catch-up provision allowing for twice the annual for twice the annual contribution limit for 3 years preceding normal retirement age.
