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Frequently Asked Questions by Employees*

  1. What is a 403(b) Plan?
  2. What is a 457(b) Plan?
  3. Am I eligible for catch-up contributions?
  4. What are Roth contributions?
  5. What are my rollover options and the taxation involved once I have obtained a qualifying event for distribution?
  6. When am I considered "severed from employment" as it pertains to my 403(b) or 457(b) account(s)?
  7. My employer is offering a post-severance Early Retirement Incentive (ERI) program. If I decide to participate, will I have the option to defer any portion of these payments into my 403(b) or 457(b) accounts?
  8. Can I take a hardship withdrawal from my 403(b) account?
  9. I have received a check from my investment provider (or parent entity) that is payable to my Employer pertaining to a legal settlement. What should I do with this check?
  10. Where do I go for investment advice?
  11. Does PERS affect my 403(b) or 457(b) contributions?
  12. What is the process to add a provider to my employer's list of vendors?
  13. Can I move 403(b) funds to another Vendor? to an IRA?
  14. Is it possible to use my 403(b)/457(b) account to purchase pension plan Permissive Service Credit?
  15. I have received a package of corrective distribution documents from CCC. Please explain?
  16. Are my 403(b) and/or 457(b)elective contributions subject to FICA (Medicare and Social Security) withholdings?


  1. What is a 403(b) Plan?

  2. 403(b) Plans generally serve as voluntary supplemental retirement savings plans designed to supplement retirement benefits available from State pension plans and Social Security. The IRS provides a Summary of 403(b) Plan Basics page and a 403(b) Plan Brochure for Employees on its website.

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  3. What is a 457(b) Plan?

  4. 457(b) Plans are supplemental retirement savings plans similar to 403(b) Plans, and are called Deferred Compensation Plans (DCP for short) for state and local government employees (including public school employees). Some public school employers offer 457(b) Plans and others do not. To check if your employer offers a 457(b) Plan click here.

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  5. Am I eligible for catch-up contributions?

  6. Catch-up provisions are subject to availability under your employer's plan (please see your employer's page for additional details).

    If you are age 50 or over by the end of the current year, you are eligible to use the Age 50 Catch-up (if this catch-up is available under your employer's 403(b) and/or 457(b) plan document).

    There are other special catch-ups available to employees who meet very specific eligibility requirements. For these catch-ups, determination of eligibility requires collection and evaluation of historical service, payroll, and contribution data for all periods of employment back to your initial hire date from your employer. If you wish to defer more than the basic elective deferral limit, or the basic limit plus the Age 50 Catch-up amount for participants turning 50 or better by the end of the year, contact CCC and we will request the required data from your employer to make a determination. (Please note: data requests of this nature make take time to fulfill and will be subject to availability.)

    1. The 403(b) plans the Special Catch-up is called the "15 Years of Service Catch-up." If you will complete at least 15 years of full time service with your current employer by the end the current calendar year and have contributed an average of less than $5000 per year of service to the 403(b) plan, you may be eligible additional amounts under the 403(b) 15 Years of Service Catch-up (if available under your employer's 403(b) plan). The IRS requirements for use of 15 Years of Service Catch-up require complete historical data to evaluate eligibility and, if eligible, determine the final amount available under the catch-up and document the calculation for audit purposes.

    2. For 457(b) plans the Special Catch-up is called the "3 Year Catch-up." If this year is one of the last three years before your normal retirement age you may be eligible for the 3 Year Catch-up (if available under your employer's 457(b) plan). The IRS requirements for use of 3 Year Catch-up require complete historical data to evaluate eligibility and, if eligible, determine the final amount available under the catch-up and document the calculation for audit purposes.

    Click here for more details concerning contribution limits.

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  7. What are Roth contributions?

  8. Roth contributions and, unlike Traditional 403(b) or 457(b) elective deferral contributions, are subject to Federal and State income tax withholdings (also referred to as after-tax deferrals). The distribution of an employee's contributions to a Roth 403(b) or 457(b) account are not taxable at distribution, since taxes were paid on the contributions to the account in the year they were deferred. If a distribution from a Roth 403(b) account is "qualified", the gains on the account are also distributed tax-free. For a distribution from a Roth 403(b) account to be “qualified,” it must meet two conditions:

    1. Payment must be made after age 59 ½, disability, or death, and
    2. The Section 403(b) account must have been in existence at least five taxable years (i.e., calendar years).

    Termination of employment before age 59 ½, disability, or death does not trigger a qualified distribution. In such an event, to qualify for a tax-free distribution, the employee will either need to leave the Roth account in the Section 403(b) program until age 59 ½ or roll it over to a Roth IRA, a designated Roth 401(k) account, a designated Roth governmental 457(b) account, or another designated Roth 403(b) account.

    To check if your employer offers Roth Contributions as a feature under their Plan(s), and to see which vendors(if applicable) offer Roth accounts, click here.

    You may find it helpful to review some of the websites listed below.

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  9. What are my rollover options and the taxation involved once I have obtained a qualifying event for distribution?

  10. Once a qualifying event* has occurred, a participant may choose to either a taxable distribution to themselves or to roll the funds to another eligible retirement account. Most vendors provide a "special tax notice" that describes the various rollover options and taxation associated with the options as a part of, or addendum to, the vendor's distribution and rollover forms. Usually the participant's authorization section of one of these forms requires the participant to attest to the fact they have read the notice pertaining to taxation and understand the applicable tax consequences of the transaction they are submitting.

    (Please note: the IRS provided generic model language for 402(f) Notice in 2009 (Notice 2009-68), this model language is viewable here.) CCC strongly encourages participants to seek the advice of a qualified and trusted financial advisor and/or tax consultant concerning investment and distribution choices.

    In the 403(b) plans, the most common events for distribution are attainment of Age 59.5 or Severance from Employment. In 457(b) Plans the most common events for distribution is Severance from Employment. *More transaction information is available here.

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  11. When am I considered "severed from employment" as it pertains to my 403(b) or 457(b) account(s)?

  12. Severance is defined as a complete severance from any employment relationship with the Employer sponsoring the 403(b) and/or 457(b) plan.

    CCC has created guidance for employers to determine if an employee meets the criteria to be considered "severed from employment". This document is available here.

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  13. My employer is offering a post-severance Early Retirement Incentive (ERI) program. If I decide to participate, will I have the option to defer any portion of these payments into my 403(b) or 457(b) accounts?

  14. No, post-severance deferrals from ERI stipends are not allowed.

    Employers considering an ERI program, please contact CCC as the rules concerning these programs are complex and failure to appropriately set up this program may have unintended consequences.

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  15. Can I take a hardship withdrawal from my 403(b) account?

  16. Hardship Distributions are only available under certain circumstances and require documentation. Note: hardship transactions are subject to availability under your employer's plan (please see your employer's page for additional details). Please visit our Hardships page for details.

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  17. I have received a check from my investment provider (or parent entity) that is payable to my Employer pertaining to a legal settlement. What should I do with this check?

  18. Some of these checks appear to be payable to the Employer with no mention of the Employee, while others appear to be payable to the Employer for the benefit of the Employee. The best information available on this issue may be found on the settlement administrator's website or by calling the settlement administrator's service center, this information should appear in the letter or check stub that accompanied the check you received.

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  19. Where do I go for investment advice?

  20. Financial goals are highly individualized, as are your basic financial skills and experiences. It's up to you to decide whether or not to seek the services of a professional financial advisor or to seek a do-it-yourself investment option without the aid of a financial professional. Should decide to seek a financial advisor, the following links provide helpful information to help in your selection process.


    Information on local advisors working in your employer's plan can be found by visiting the 403(b) Vendor List page and clicking the vendor links to access advisors who market that vendor's products locally. Participants are not generally limited to working with the advisors listed, however, it is important to note that the vendors providing investment products in a given plan are limited to the Active 403(b) Payroll Slot Vendors.

    Note: CCC does not provide investment advice or market investment products.

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  21. Does PERS affect my 403(b) or 457(b) contributions?

  22. The general answer is no. You are allowed to contribute right up to your elective deferral limit into either or both of the 403(b) and 457(b) plans, irrespective of employee and employer PERS contributions.

    The only situations in which PERS contributions impact your ability to contribute to 403(b) and/or 457(b) plans is when your gross salary is fairly low. Since contributions are limited to 100% of compensation, if employee PERS contributions are pre-tax salary deductions, they reduce your compensation. Consequently, they reduce the amount you can contribute to the 403(b) and/or 457(b) plans.

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  23. What is the process to add a provider to my employer's list of vendors?

  24. The process for adding a "provider" (our terminology is "Vendor with an Active Payroll Slot") may be found in your employer's 403(b) Plan Document, available by selecting your employer on our home page.

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  25. Can I move 403(b) funds to another Vendor? to an IRA?

  26. If contract exchanges are allowed under your employer's plan, 403(b) funds can be exchanged with and to an eligible 403(b) vendor in your employer's plan. Rollovers out of the plan to another eligible retirement account (such as an IRA) are only possible if you are eligible for a distribution, typically by attaining age 59-1/2 or severing employment depending on the rules of your employer's plan. More transaction information is available here.

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  27. Is it possible to use my 403(b)/457(b) account to purchase pension plan Permissive Service Credit?

  28. The answer is yes in the States of Oregon and Washington, provided the employer's 403(b) or 457(b) plan document allows for Permissive Service Credit Transfers. Please note: Permissive Service Credit Transfers require Plan Administrative Approval, to issue the approval a copy of documentation issued by the State Retirement Plan documenting the exact dollar amount required for the purchase of service or waiting time is required. More transaction information is available here.

    Additional background information on Permissive Service Credit Transfers can be found here. Also see Oregon Senate Bill 399 and Revised Code of Washington (RCW) 41.32.066 for relevant documentation.

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  29. I have received a package of corrective distribution documents from CCC. Please explain?

  30. One service CCC provides to employers is testing contribution limits and assisting employees in the timely correction of excess contribution when they occur, the packet of information you received describes how that correction is taking place and what you need to do as a result. It is critical you follow any instructions provided, keep the communication with your tax records, and contact CCC with questions.

    A timely correction of as excess deferral via a "corrective distribution" is one that occurs before April 15th for an excess that took place in the prior year. For instance, a 2018 excess must be distributed + or- gains or losses before April 15, 2019. In that example the excess must be claimed as 2018 taxable income (the year the over-contribution occurred) while the gains, if any, are claimed on the taxes for the year the distribution was received (2019). The vendor will issue a 1099 at the end of the year the distribution took place with a box-code that indicates to the IRS the distribution was attributable to a corrective distribution for the prior tax year.

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  31. Are my 403(b) and/or 457(b) elective deferrals subject to FICA (Medicare and Social Security) withholdings?

  32. Yes. Employee contributions to both 403(b) and 457(b) plans are subject to FICA withholdings.

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Page Last Modified: 3/5/2019 3:14:36 PM