Retirement Benefits

Which Retirement Savings Plan Is Right for You?

If you could do something today that could give you a more financially secure retirement, you would do it, right?

Retirement savings plans, also called deferred compensation plans, work alongside your CalPERS pension and personal savings to provide you with income during retirement. As a CalPERS member you have a variety of plans available to you. Keep reading to discover your options and what to consider when selecting a retirement savings plan.

What are deferred compensation plans?

Deferred compensation plans are voluntary savings plans that allow you to defer 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.

Typically plans offer two options: traditional and Roth. Traditional accounts can benefit from the power of tax-deferred compounding, but you will have to 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. You may want to 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.

The CalPERS 457 Plan is for employees of participating public agencies and schools. It is a tax-deferred plan that allows you to take advantage of tax-deferred compounding. The CalPERS 457 Plan has an “all-in” fee structure and no hidden costs, which allow you to keep more of your investment returns. To enroll, your employer must participate in the plan. To see a list of agencies that offer this plan, view CalPERS 457 Plan Participating Agencies.

Employees of school districts, community colleges, and county offices of education can choose to purchase a variety of 403(b) supplemental savings products through 403bCompare. The California State Teachers’ Retirement System (CalSTRS) manages the 403bCompare website. You can find information about retirement planning, search vendors and products registered on the site, and view details about 403(b) plans.

Savings Plus is administered by the California Department of Human Resources (CalHR). This program provides 401(k) and 457 deferred compensation plans for State of California and California State University employees. Participants can choose to contribute by payroll deduction on a pretax or after-tax Roth basis.

You also can learn about the CalPERS Supplemental Contributions Plan (SCP) available to state employees on the CalPERS Supplemental Contributions Plan website or our Deferred Compensation webpage.

What else to consider?

  • Do you want to pay taxes at the time you contribute or the time you withdraw your funds?
  • What are the fees associated with the plan?
  • What level of customer service do you desire?
  • 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 rollover 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 allowance? Use our Retirement Estimate Calculator to find out.

A retirement savings plan can offer you additional peace of mind in retirement. Get started today!