457 Plans

As you have probably heard, it's likely you won't be able to depend on Social Security to deliver all of the money you'll need for retirement. Consequently, the onus is on you to help supplement your retirement income in order to help you enjoy your retirement years.

But here's some good news: If you work for a state or local government or a 501(c)(3) non-profit organization, you have an excellent opportunity to set aside money for your retirement by contributing to your employer's 457 retirement plan.

A 457 plan (named for the section of the Internal Revenue Service code that authorized these plans) gives you the opportunity to grow your retirement nest egg faster. 457 plans offer significant tax advantages on both your contributions and earnings on the investments you make through the plan.

Here are the many benefits and features of 457 plans:

• Tax Advantages
  You make contributions to your 457 plan from your pre-tax income. As a result, these contributions are excluded from your current federal taxable income. That means you'll pay less in federal income taxes and, in most states, state income tax as well.
  
  In addition, you do not pay taxes on your earnings from your investments in your 457 plan until you retire or withdraw them. That means your investments have the potential to grow faster.
  
  
• High Contribution Levels
  The maximum annual contribution you can make in your 457 plan is:
  
  

  Year	Maximum annual contribution if you are under age 50
  2009	$16,500

  If you haven't contributed the maximum amount of contributions in previous years, 457 plan participants who are age 50 and older are eligible to set aside additional monies through catch-up contributions:

  Year	Using catch-up contribution provision, maximum annual contribution if you are age 50 or over
  2009	$22,000

  
  
  If you are within three years of what your employer's plan considers "normal retirement age," you may be eligible for an alternative catch-up provision. Because this provision is quite complicated, please consult with your Dearborn & Creggs financial representative for details.
  
  
• Withdrawals
  Unlike most retirement plans, you will not have to pay a 10 percent penalty if you withdraw money from your 457 plan before you reach age 59 1/2. But you will be taxed on the amount you withdraw from the plan. You are required to start making minimum withdrawals when you turn age 70 1/2, unless you are still employed.
  
  
• Rollovers
  To maintain the tax deferral of your 457 plan assets when you leave your job for another employer or retire, you can roll the assets over to another defined contribution plan, such as a 401(k), 403(b) or IRA. Your 457 assets will then become subject to the rules of the new plan.
  
  For example, if you roll over your 457 assets into a 401(k) plan and you make withdrawals before you turn age 59 1/2, you will incur the 10 percent early withdrawal penalty that applies to 401(k) plans.

Getting Started

Participating in your employer's 457 plan is one of the smartest financial moves you can make today to help achieve the retirement you envision. Your Dearborn & Creggs financial representative will help you set up your 457 plan account through:

• Personalized Investment Counseling Services
  Your Dearborn & Creggs financial representative will talk to you in depth about your financial situation and objectives, make investment and contribution recommendations and answer any questions you may have about your 457 plan.
  
  
• Asset Allocation Strategies
  Diversifying your assets among different asset classes (stocks/bonds/cash) will help to reduce your investment risk.* Lincoln Investment makes available asset allocation and risk management programs from leading investment strategists.
  
  
• Broad Range of Investment Options
  As an independent full-service broker/dealer, we offer a large selection of mutual funds appropriate for 457 plans.
  
  
• Consolidated Investment Program
  We offer you a consolidated investment program called Retirement SOLUTIONS from Lincoln Investment. Retirement SOLUTIONS provides access to more than 1,000 mutual funds and several asset allocation and risk management strategies.
  
  Your accounts, account activity and performance all appear on one consolidated, easy-to-understand statement for ease of recordkeeping
  
  
• Ongoing Education
  We provide a comprehensive communications program to help educate 457 plan participants about the investment markets, their investment options and the elements of their 457 plan, available through one-on-one counseling.
  
  

For more information about how we can help make a difference in your retirement savings, especially through your employer's 457 retirement plan, please contact your Dearborn & Creggs financial representative.

*There is no assurance that a diversified portfolio will produce better than an undiversified portfolio, nor does diversification assure against market loss.

Dearborn & Creggs Can Help

A Dearborn & Creggs financial representative stands ready to assist you with your 457 retirement investment plan and to help grow your retirement assets.