Waddell & Reed

Governmental Employer

As a governmental entity, your employee retirement program must suit your particular needs. Waddell & Reed offers retirement benefit plan options designed specifically for state agencies and local governments.

What is a 457 Plan?
The 457 plan, sponsored by higher education institutions and government entities, is a deferred compensation plan that is funded by eligible employees through salary reduction. These plans also can be made available to a select group of management and highly compensated employees of certain tax-exempt organizations.

457 Plan At A Glance

Administrator Testing None.
Employee Contribution Limit Maximum employee deferral is the lesser of 100 percent of income after application of FICA or $17,500.
Catch-up Contribution Up to $5,500 for participants age 50 or older.
Special Catch-Up Contribution Employees within three years of the retirement age specified in the plan document may qualify for a special 457 plan catch-up provision.
Loans Available Yes, if employer elects in the Plan Document.
Employee Eligibility Requirements All employees are eligible.
Total Employee/Employer Maximum Contribution $17,500. Employers may contribute to the plan on behalf of participants. Employer contributions constitute compensation earned and deferred by the participant.
Annual Custodial Fee None.

Employer Benefits

  • Provide a retirement program with relatively little administrative burden.
  • Greater flexibility in plan design than is available for qualified plans.
  • Nondiscrimination rules applicable to qualified retirement plans do not apply to 457 plans.
  • Attract and retain quality employees.
  • Improved employee morale, productivity and employer/employee relations.

Employee Benefits

  • Save for retirement with pre-tax dollars.
  • Earnings are tax deferred until withdrawn.
  • Contribution limits are greater than those of IRAs.
  • Salary deduction offers a convenient way to invest consistently over time.

What is a Simplified Employee Pension IRA Plan (SEP IRA)?
The SEP IRA is an alternative to more complex employer-sponsored retirement plans. It is designed for employers who want to establish and contribute to a retirement plan for employees. It is commonly used by self-employed individuals or employers who don’t offer other qualified plans.

SEP IRA Plans At A Glance

Who May Establish
  • All business types.
  • For-profit and not-for-profit organizations of any size.
Administrator Testing None.
Establishment New plans must be established by the employer's tax filing due date, plus IRS-approved filing extensions.
Employee Eligibility Requirements
  • 21 years old.
  • Have worked for the employer for at least three of the immediately preceding five years.
  • Have earned at least $550 (indexed for inflation) in compensation.
Excludable Employees Certain union employees or non-resident alien employees.
Employer Contributions
  • Discretionary annually
  • Maximum is 20 percent of adjusted net business income or 25 percent of W-2.
  • Contribution not to exceed $51,000.
Annual Custodial Fee $18

SEP IRA Benefits

Employer Benefits

  • Attract and retain quality employees.
  • Improved employee morale, productivity and employer/employee relations.

Employee Benefits

  • Employer contributions are not taxed until withdrawn.
  • Earnings on plan assets are not taxed until withdrawn.

What is a 401(a) Employer Contribution Plan?
A 401(a) employer contribution plan is a defined-contribution plan that allows the employer to make matching or discretionary contributions to employees.

401(a) Governmental Employer Contribution Plan Benefits

  • No annual IRS Form 5500 filing.
  • No annual nondiscrimination testing or reporting.
  • Discretion by the employer as to the type of employee eligible to receive a contribution.
  • Discretion by the employer as to the amount and payment schedule of the employer contribution.

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