Deferred Compensation Plan (Deferred Comp)

Retirement plans are complicated benefits that include many rules and regulations. For more detailed information please review your Deferred Compensation Summary Plan Description (SPD). However, the links below give you highlights about the Deferred Compensation program without being an official plan document. If you have any questions or concerns, please contact your Prudent advisor.

Eligibility
  • All employees are immediately eligible to participant in Deferred Comp and they can enroll at any time.
Contributions
  • Contributions are pre-tax and made through a payroll deduction.
  • Tri-City does not make a contribution.
  • Completion of a Salary Deferral form is required to enroll.
  • Maximum annual contribution amounts are set by the IRS and are an aggregate of all 457(b) plans.
  • For 2022, participants may contribute the lesser of 100% of their eligible compensation or:
    • Age 49 and under: $20,500
    • Age 50 and over: $27,000
  • A Special Catch-Up provision may also apply. Please contact your Prudent advisor for more information.

Changing Contribution Amounts:

  • Participants may change their contribution amounts at any time by completing a new Salary Deferral form.

If contributions are suspended, a participant’s account balance will remain invested in the Retirement Program and it will continue to be tax-deferred.

Vesting

Vesting refers to the ownership of the money contributed to your retirement plan.(i.e., you own the money in your account).

  • All contributions and related earnings are always 100% vested.
Distributions
  • Because Deferred Comp is a tax-favored retirement plan, distributions from Deferred Comp can only be made upon occurrence of one of the following “trigger events:”
  • Severance from Employment, Retirement, Death or an Unforeseen Emergency.
  • The IRS requires minimum distributions (RMDs) from Deferred Comp upon reaching the age of 72. 
  • Please consult a tax professional to determine the tax implications and the best options for you regarding RMDs or before taking any money out of Deferred Comp.
  • Lincoln may charge a distribution fee.
  • Distribution/Withdrawal forms can be obtained from your Prudent advisor or from www.TCMCRetirement.com.

In-Service Withdrawals: Generally in-service withdrawals are not allowed by Deferred Comp. Exceptions include:

  • Unforeseen Emergency: IRS guidelines and the Retirement Plan documents describe an Unforeseen Emergency as a severe financial hardship to the participant or beneficiary resulting from: an illness or accident, loss of property due to casualty or other similar extraordinary and unforeseeable circumstance beyond your control. The purchase of a home, automobile, payment of college tuition, or credit card debt are not considered unforeseen emergencies.
  • De Minimis Distributions: Deferred Comp account balances of less than $5,000 can be distributed if (a) there have not been any contributions made in the prior 24 months and (b) no distributions have been previously made.
  • Please contact your Prudent advisor for more information.

Taxing of Distributions:

  • Deferred Comp distributions are 100% taxable if they are not directly transferred to another eligible retirement plan or to a Traditional IRA.
  • Distributions will be taxed as ordinary income and the IRS will impose a mandatory 20% federal income tax withholding on all distributions.
  • Deferred Comp distributions are not subject to a 10% early withdrawal penalty tax, regardless of age.

Leaving Tri-City:

  • Participants leaving Tri-City are welcome to keep their retirement savings in the Retirement Program where they will continue to be invested and monitored just as if the participant were still employed by Tri-City.
  • Participants also have the option to (a) roll their account balance to a new employer plan (please check with your new employer first), (b) roll it into a Traditional IRA or (c) take a distribution.
  • Please contact your Prudent advisor for more information.

Rollovers:

  • Deferred Comp accepts rollovers from other governmental 457(b), 401(a), 401(k) and 403(b) plans, and Traditional IRAs. (Rollover amounts from other eligible plans remain subject to the IRS 10% premature distribution penalty unless an IRS exception applies.)
Loans
  • Loans are not permitted.