What is a Deferred Compensation Plan?
The Deferred Compensation Plan is an easy and convenient way to prepare for your retirement. It allows you to defer a portion of your salary through payroll deductions into the Plan and invest it, on a tax-deferred basis. It is a tax-deferred, defined contribution, supplemental retirement program open to all San Joaquin County employees. The Plan is administered by Mass Mutual and is authorized under Section 457 of the Internal Revenue Code. It is similar to 401(k) plans that private companies offer to their employees.
Funds in the Deferred Compensation Plan are not subject to taxes until they are withdrawn from the Plan. At the time of withdrawal normal income taxes are due, but there is no IRS penalty, regardless of your age. Because of the tax-deferred status of the funds in the Deferred Compensation Plan, Federal law strictly limits access to these funds and under normal circumstances prohibits participants from withdrawing these funds while employed with the County.