Retirement savings plans, also called deferred compensation plans, complement your CalPERS pension, Social Security (if that benefit applies to you), and other savings to provide additional retirement income. You have several options available as a CalPERS member.
What are deferred compensation plans?
Deferred compensation plans are voluntary savings plans that automatically deduct any amount—subject to annual limits—from your paycheck. These include 401(k), 403(b), Individual Retirement Arrangements (IRAs), and 457 plans. All have varying contribution limits, fees, and requirements around withdrawal.
Plans typically offer two options: traditional and Roth.
- Traditional accounts can benefit from the power of tax-deferred compounding, but you will pay taxes once you start making withdrawals. This can be disadvantageous if you are in a higher tax income bracket when you retire.
- Roth accounts allow you to contribute after-tax, meaning you won’t have to pay taxes when you make withdrawals in retirement.
Consider contributing to both types of plans to access the benefits of each.
Which plans are available to you?
There are different plans available to CalPERS members, depending on your employer.
- Public agency and school employees can tap into the CalPERS 457 Plan. It is a tax-deferred plan that allows you to invest from your paycheck on a pre-tax and Roth after-tax basis. The plan has an “all-in” fee structure with no hidden costs, so you can keep more of your investment returns. Your employer must participate in the plan to enroll. View CalPERS 457 Plan Participating Agencies to see if your agency offers this plan. Learn more in our article, Maximize Your Retirement: CalPERS 457 Plan Offers Savings for Public Employees.
- School employees can purchase a variety of 403(b) supplemental savings products through 403bCompare. You can find information about retirement planning, search vendors and products registered on the site, and view details about 403(b) plans.
- State of California and California State University employees can take advantage of 401(k) and 457 deferred compensation plans through Savings Plus. You can contribute by payroll deduction on a pretax or after-tax Roth basis.
- State of California employees can also contribute to the CalPERS Supplemental Contributions Plan, an after-tax supplemental contribution plan.
What else to consider?
- Do you want to pay taxes when you contribute or when you withdraw your funds?
- What are the fees associated with the plan?
- What level of customer service do you want?
- How involved do you want to be when managing your investments?
- How much time do you have until you plan on retiring?
- What is your risk appetite?
- Do you have funds to roll over from another plan?
- Will you be receiving Social Security? Create an account to estimate future benefits.
- How much will you be receiving from your CalPERS retirement benefits? Use our Retirement Estimate Calculator to find out.