IU 457(b) Retirement Plan
The IU 457(b) Retirement Plan is a section 457(b) defined contribution retirement plan. This is a voluntary employee-funded plan; therefore, the participant makes all plan contributions.
The information on this page is only a summary. Review the IU 457(b) Retirement Plan – Plan Document for a detailed description of the terms and conditions of the Plan.
All IU employees are eligible to participate in this plan.
Eligible employees may enroll in the plan at any time by following these step-by-step enrollment instructions to enroll in the plan, setup your account online through Fidelity NetBenefits, select your investments, and designate your beneficiaries.
Employees make all contributions to the plan. Contributions may be made on a pre-tax or after-tax Roth basis, and can be a flat-dollar amount or a percentage of pay. See the section below titled ‘Contribution Limits’ for additional details.
- $22,500 for 2023 / $23,000 for 2024 for all employee (both pre-tax and after-tax Roth) contributions
- Plus an additional $7,500 for 2023/2024 if you are age 50+ or up to an additional $22,500 for 2023 / $23,000 for 2024 if you are age 62, 63, or 64 (you cannot make both the age 50+ and the age 62, 63, or 64 catch-up contributions in the same year). The age 62, 63, or 64 catch-up is a calculation of the employee’s under-utilized amount. Not all employees are eligible.
A participant is always 100% vested in their plan account.
This is a “participant directed plan” meaning you are responsible for directing the investment of your plan account. If you do not select investments, your funds will be invested in the plan’s default investment option – and age-appropriate Vanguard Institutional Target Retirement Date Fund.
Distributions & Withdrawals
You can withdraw IU 457(b) account funds held at Fidelity while still employed by IU if you are age 59½ or older, or at any age after your IU employment ends.
- Distributions of pre-tax contributions are subject to a 20% federal income tax withholding.
- Distributions of Roth (after-tax) contributions are tax-free if they are made (1) after a 5-year holding period (begins January 1 of the year you made your first Roth contribution); and (2) after you reach age 59½, become disabled, or pass away.
- Watch a video: Explore Your Withdrawal Options at Fidelity
- For information on Required Minimum Distributions (RMDs) see the ‘Options When You Separate from IU’ section below.
- Contact Fidelity at 800-343-0860 or log in to your Fidelity NetBenefits account to learn about your withdrawal or distribution options.
A loan may be available from your IU 457(b) account. You are limited to one loan across your IU supplemental retirement plan accounts (IU TDA and 457(b)) held at Fidelity.
Before you make the decision to take a loan from your account, consider the following:
- Loans are subject to both federal tax code and investment company rules and regulations.
- In most cases, you don’t pay taxes or penalties on a loan but you do repay the loan with after-tax dollars plus interest and there may be additional fees.
- Fidelity On-Demand Workshop: Understanding Plan Loans
To request a loan, contact Fidelity at 800-343-0860 or log in to your Fidelity NetBenefits account and select ‘Loans or Withdrawals’ from the Quick Links menu next to the plan name.
Options When You Separate from IU
All plan contributions stop when your employment with IU ends. Upon termination of employment, you may:
- Leave accumulations in the plan account and continue to manage investments;
- Withdraw all or a portion of vested plan account accumulations (subject to income taxes and/or penalty taxes); or
- Rollover all or a portion of vested plan account accumulations to an eligible retirement plan (e.g., an IRA).
After terminating employment with the university, most transactions related to your plan account are handled directly with the applicable investment company. For more information, review the Benefits After Separation Guide.
Required Minimum Distributions (RMD) at Age 72
Federal law requires participants to begin receiving at least a partial distribution of tax-deferred retirement account funds by April 1 of the calendar year following the year he/she reaches age 72, or upon retirement/separation, whichever is later. Failure to withdraw the RMD annually by the applicable deadline can result in substantial tax penalties
- Review the IU 457(b) Retirement Plan – Plan Document
- Update your beneficiaries
- Make changes to your account
- Compare the two supplemental retirement plans
- Schedule a individual retirement counseling appointment
- Review the maximum contribution limits for each plan
- Explore the Frequently Asked Questions
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