GuideStone 457(b) Information
Do you want to tax-shelter more of your income?
You can through the 457(b) plan. GuideStone Financial Resources of the Southern Baptist Convention is pleased to partner with your employer to make this unique investment opportunity available to eligible employees.
Contact your human resources or benefits office to review your employer’s qualifications for enrollment. Then, complete an Eligible Employee Deferral Agreement (pdf) and a Beneficiary Designation Form (pdf) to get started.
What benefits are afforded to me with the 457(b) plan?
- Make additional salary deferrals above the individual limits offered through a 403(b) or 401(k) plan.
- Lower your current taxable income.
- Defer receiving and paying income taxes on bonuses.
- Take advantage of compound tax-deferred earnings.
- Receive distributions and spread taxes over many years to potentially lower your tax rate.
- Offset taxes from nondiscrimination testing refunds.
- Partner with a company that has historically competitive investment products, common values and a steadfast commitment to superior service.
How much can I tax-shelter in the 457(b) plan?
Both you and your employer may make contributions to the 457(b) plan. Contributions can be made to the 457(b) plan even if you have reached the maximum contribution limits in your employer-sponsored retirement plan. This gives you the opportunity to potentially double the amount you could otherwise tax-shelter in your 403(b) or 401(k) plan.
The normal contribution limit, from all sources, to the 457(b) plan is the lesser of 100% of includible compensation or $15,500 for 2007 and 2008. After 2008, the contribution limit will be indexed based on the Consumer Price Index (CPI); any adjustments will be in $500 increments. When you are within three years of normal retirement age, as defined by the 457(b) plan, you may be eligible to contribute up to double the normal contribution limit.
For more information regarding includible compensation and contribution limits, request the 457(b) Annual Deferral Limit Calculation Form (pdf) from GuideStone or contact a tax advisor.
What are my investment options?
When you decide to participate in the 457(b) plan, you may choose from one or more investment funds that are available to you through GuideStone Funds. Consider these advantages:
- Proven investment managers — Invest with managers who are held to higher standards.
- Historically competitive returns — Potentially capitalize on your investment dollars.
- Low expenses — Have more of your money working for you.
- Personalized customer service — Get solutions from a financial services specialist.
- Christian-based, socially screened funds — Choose investments that match your values.
What are my distribution choices?
The 457(b) plan at GuideStone offers you flexibility when deciding what to do at retirement. Your account may be distributed after you terminate service with your employer. Available benefit payment options include single-sum payments, periodic payments or a deferral of payments to a future date.
If you defer payment(s) to a future date, you could subsequently make a one-time change to another date that is later than the original start date. If you do not make a distribution election within 30 days of termination, the account balance must be distributed in a single payment within 60 days of termination.
How will this affect my taxes?
Tax effects at deferral
Contributions from both an employee and employer to the 457(b) plan are not subject to federal income tax. However, you must pay Social Security (up to the Social Security wage base) and Medicare taxes at the time of deferral.
Any amount that you contribute to the plan will be reported as deferred on your Form W-2 at the end of each year. If applicable, you will need to consult a tax advisor for guidance about state income tax laws as they apply to the 457(b) plan.
Tax effects at distribution
Contributions and earnings to the 457(b) plan are subject to federal income taxation at distribution. Social Security and Medicare taxes are paid at the time of deferral, so distributions of contributions and earnings are not subject to these taxes at distribution.
You will receive a Form W-2 from GuideStone each tax year that the money is distributed from the 457(b) plan. Again, you will need to consult a tax advisor for guidance about state income tax laws if applicable.
No matter when distributions are taken from the 457(b) plan, they are never subject to the 10% early distribution penalty tax applicable to other plans such as IRAs, 403(b)s and 401(k)s. However, the 457(b) plan is subject to the same required minimum distribution rules as IRAs and other retirement plans.
It is important to note that distributions prior to your Social Security full retirement age may affect your Social Security benefits. Contact the Social Security Administration for more details.
What other considerations are noteworthy regarding the 457(b) plan?
Beneficiaries of the 457(b)
If you pass away before all amounts are paid from the plan, your beneficiaries will have distribution options based on whether benefit payments have started. If payments have not started, the beneficiary will have the same distribution options as you with some limitations. Once payments have started there are further limitations. GuideStone will provide information to your beneficiaries concerning their options.
Rollovers and transfers
Rollovers to and from 457(b) plans are typically not permitted. However, in certain circumstances, you may make a direct transfer of assets from the 457(b) plan of one tax-exempt organization to the 457(b) plan of your current tax-exempt employer.
Communication of changes
Like 401(k) and 403(b) plans, 457(b) plans are named for sections of the Internal Revenue Code, and special rules apply to each type of plan. Please note that plan details could change as the IRS continues to issue guidance and regulations about 457(b) plans. GuideStone will alert your employer as soon as administratively possible when new guidance or requirements impact these plans.
Assets of the employer
Contributions to the 457(b) plan are assets of the employer until they are distributed. These plans are called “unfunded deferred compensation plans.” Contributions and earnings are held in a trust until benefits are payable under the terms of the plan.
Because amounts in the trust are assets of the employer, they are subject to the rights of creditors in the event of the employer’s insolvency. If these funds did not remain assets of the employer, you would be required to pay income taxes at the time of deferral and no tax savings would be realized. Benefits are payable solely from the general assets of the employer and are not guaranteed by the employer, GuideStone or any other person or entity.
What if I need further information?
You can contact your GuideStone Financial Resources representative toll free at 1-888-98-GUIDE (1-888-984-8433) Monday through Friday from 7 a.m. to 6 p.m. CST. In addition, you may contact your human resources or benefits office.
How do I get started?
To get started, just complete an Eligible Employee Deferral Agreement (pdf) and a Beneficiary Designation Form (pdf) and submit them to your human resources or benefits office.
This material briefly describes general information and key features of the 457(b) plans. The general terms of the plan documents were drafted to reflect GuideStone’s understanding of applicable IRS rules and guidance. The Plan Document, Eligible Employee Deferral Agreement(s) and the Trust Agreement control the terms and provisions of the arrangement.
How do I change my agreement?
To change your deferral information, just complete a deferral agreement change form (pdf) and submit it to your human resources or benefits office.
You should carefully consider the investment objectives, risks, charges and expenses of GuideStone Funds before investing. For a copy of the prospectus with this and other information about the funds, please
download a prospectus (pdf) or call
1-888-98-GUIDE (1-888-984-8433). You should read the prospectus carefully before investing.