10 Things You Might Not Know About Your PERAPlus 401(k)/457 Account

January 1, 2013

As a PERA member, you already have the financial security that your PERA retirement benefit will provide.  But, for most members, your PERA retirement benefit is not a 100% replacement for your pre-retirement income stream, so it is imperative that you save additional funds to supplement your income in retirement.

The PERAPlus 401(k) and 457 Plans are a great way to save money (and lower your current taxable income).  Below are 10 things that you might not know about how your PERAPlus Account works for you.

Free Advice.  Not sure how much you should be saving to meet your retirement goals?  The Personal Online Advisor is an easy-to-use interactive system that helps you decide how to invest your money in the asset class options.  You can import information from your PERA DB or DC account, as well as more than 70 partner organizations.  Best of all, you can use it for no additional charge.

Low fees.  There is only a $1.00 per month participant fee and the PERAdvantage funds’ total fees are extremely competitive and transparent.

Access to a diverse mix of funds.  The PERAdvantage funds include target retirement date funds that seek to reach a targeted retirement date and are automatically diversified using a selection of underlying assets.  Also available are six diversified asset class investment funds.  For an additional fee you can access the self-directed brokerage, which allows for expanded investment choices beyond the PERAdvantage funds.

Access to Your Money in the Event of an Emergency.  Are you hesitating to defer as much to your 401(k) or 457 account as you could because you are worried about needing the money for an emergency?  Both the PERAPlus 401(k) and 457 plans have hardship/unforeseen emergency provisions that allow you to access your money in the event of an emergency.   Additionally, you can take up to two loans from each plan.  Don’t let concerns about the unknown stop you from contributing now.

Max your tax-deferring options.  The PERAPlus 401(k) and 457 allow you to contribute up to $16,500 (for 2012) to each plan.  That means you can contribute up to $33,000 total this year for your retirement.  Every dollar that you contribute to these plans before December 31 will reduce your taxable income for 2012.  If you are age 50 or older, you may be eligible for additional catch-up contributions.

Use Your Money to Purchase Service Credit.  Thinking about purchasing service credit?  Both the PERAPlus 401(k) and 457 plans allow you to transfer funds from your account to use for service credit purchases.  This is a great way to use tax-deferred funds to pay-off a service credit purchase.

Withdraw without penalty as early as age 55.  If you retire from PERA in the year you turn age 55, you can start taking distributions from your PERAPlus account without the early withdrawal penalty (regular taxes will apply).

Professional investment help.  If you prefer to take a hands-off approach to your account, the Professional Account Manager might be a good tool for you.  For an additional fee, a professional advisor will design a personalized plan for you, rebalance your account, regularly monitor your account, and make adjustments as needed.  Call ING for a no-obligation retirement assessment.

Real Return Fund. Worried about inflation? PERA implemented this new asset class beginning in October 1, 2011, and it is designed to offset/mitigate the possibility of inflation through broad exposure to real assets and Treasury Inflation Protected Securities (TIPS).

Rollovers accepted!  If you have a 401(k), 403(b), 457(b), or other qualified retirement account sitting around from an old job, roll it into your PERAPlus 401(k) or 457 account so you can manage all of your money in one spot.  If you are a PERA retiree or inactive member, you can still roll money into your PERAPlus 401(k) account even though you aren’t working for a PERA employer.

This post was written by Kim Riccardi from Colorado PERA.

(Would you like to write a guest post for The Dime? Email us at dimecontact@copera.org.)

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