Page 21 - 2020 McLennan County Benefits Enrollment Guide

Nationwide - A Voluntary Deferred Compensation 457b Retirement Plan

As part of your employee benefits package, McLennan County offers you the ability to participate in a 457(b) Retirement Savings
Plan offered by Nationwide. Deferred compensation plans offer supplemental retirement savings. With inflation, increases in
health care, the need for long term care or assisted living, creates the need for supplemental retirement savings to ensure you have
enough money to live on once you reach retirement age. You have the ability to determine when, where and how much you invest.
Deferred comp allows you to defer your money each pay period before it is taxed. In a deferred compensation plan you can elect
whether to invest in stocks, bonds, short-term investments or a combination (Mutual Funds). Every investment has a risk level
associated with it, which can impact the potential for growth. Keep in mind, the higher the risk the higher the potential loss of the
value. The key is to plan realistically, invest as much as you can, adjust as necessary based on life changes, stay in the plan (the
longer you invest the better your long term return) and monitor/manage your investment elections regularly to refresh your
strategy in order to stay up to date with your retirement goals. Each plan offers a variety of funding options which are listed in the
plan details.

The IRS limits the amount you can contribute each calendar year. The federal general limit for 2020 is $19,500. A special catch-up
contribution may also be available to you in the three years immediately proceeding normal retirement age under the plan. This
catch-up contribution and the age 50 and older catch-up contribution may not both be used for the same year. Elective
contributions generally may not exceed 100% of your compensation.

Rollovers
If you have a 457(b) retirement plan account with your current employer or through a different provider, and your plan permits, you
may be able to consolidate those assets.

Loans
Loans are not permitted.

Withdrawals
Since your plan is designed primarily to help you save for retirement, the IRS has placed restrictions on when money may be
withdrawn from your plan account before you retire. You may withdraw money from your plan account under the following
circumstances:

• Normal Retirement Age (generally, 70 ½ for 457(b) plans)
• Termination of Employment
• Disability
• Death
• Unforeseeable Emergency (Subject to IRS requirements)

Always consult your tax advisor or investment professional about the income tax consequences of any withdrawals. Ordinary
federal income taxes generally apply (unless distributed from Roth accounts qualifying for tax-free distributions). State income taxes
may also apply. Withdrawals prior to age 70 ½ are generally prohibited unless you are severed from employment, disabled or have
an unforeseeable emergency.

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