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Employee Contributions

roth and pretax payroll deductions being put into a 457 accountWhen you participate in RIC, you choose how much to contribute to a 457 employee contribution account (see contribution limits) through automatic payroll deduction. You may choose to have deductions taken from your paycheck before state and federal income taxes (pretax) or after taxes have been withheld (post-tax Roth). There are no vesting requirements.

Contribution Limits

The minimum amount you must contribute to participate in the 457 is $25/month. The maximum contribution limits of combined pretax and Roth are declared by the IRS annually (see IRS annual contribution limits). All pretax contributions and earnings stay tax deferred until you take the money out as income anytime after separating from state employment. For Roth information, see Roth Summary.

 

Final paycheck

When you leave State employment, you have the option to defer final wages, unused sick pay (up to $2,000), and unused vacation pay from your final paycheck (up to the IRS maximum limit). You have the option to contribute pretax, post-tax, or both. If the amount you wish to defer will cause you to go over the Age 50+ limit, you may possibly qualify for the 3-Year Catch-Up limit.

 wages plus unsed vacation plus $2,000 unused sick pay = Final Paycheck

To change the amount of your deduction for your final paycheck, complete the RIC Account Form with the exact dollar amount you wish to deduct and submit it as instructed on the form by your last day of employment. This is also the process to request a change to taxation of your deductions (pretax and Roth).

 

Deduction frequency

You may choose to have your payroll deductions taken:

  • 12 times/year (1st or 2nd paycheck of each month)
  • 24 times/year (1st and 2nd paychecks each month)
  • 26 times/year (includes 3rd paycheck of a month)
  • One paycheck
  • From final paycheck only - retiring employees have the option to defer unused sick pay (up to $2,000) and unused vacation pay from their last paycheck.

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Deduction Changes

You may change the amount (or stop) and tax treatment of your deductions at anytime (change pretax or post-tax election). If you choose to discontinue contributions, your match contributions will also be discontinued. If you wish to change your payroll deduction elections, please complete the RIC Account Form.

 

Processing Timeline

When you send in a request to change your payroll deduction amount, RIC processes the change to be effective with the 1st available paycheck of the month following the receipt of your request.

Changes to your final paycheck deduction must be submitted to RIC no later than your last day of employment.

 

IRS Maximum Limit Changes

The IRS declares the annual maximum contribution limits each calendar year. If the IRS declares to increase the maximum limit in a year, the increase will be in $500 increments.

 

 

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State of Iowa Employees

IRS annual contribution limits
Deduction frequency
Final paycheck 

Roth Summary
Deduction changes
3-Year Catch-up provision
Employer match benefit



 


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