The District is committed to helping employees build retirement wealth and security. The 457(b) Deferred Compensation Plan (457(b) Plan) is designed to supplement an employee's retirement savings. On July 7, 2019, the D.C. Department of Human Resources (DCHR) launched the 457(b) Plan Automatic Enrollment Program for District agencies.

All District government employees are eligible to participate in the 457(b) Plan EXCEPT:

• Employees serving in a temporary appointment of one year or less;
• Employees who are paid on a contract or fee basis;
• Employees, officers and judges employed by or appointed to the District of Columbia Court of Appeals and the Superior Court;
• Members of boards and commissions;
• Summer youth employees; and
• Student employees who receive a stipend and are assigned or attached primarily for training purposes to a hospital, clinic, or laboratory operated by the District government.

The 457(b) Plan is a tax-deferral plan that allows participants to contribute part of their pay check (up to the maximum deferral amount) into a retirement account. All eligible newly hired and rehired employees will be automatically enrolled in the 457(b) Plan. Eligible employees will have deferrals withheld from their pay check no later than the first pay period after the effective date of their appointment.

Participants who are automatically enrolled will have five percent of their annual salary contributed to the 457(b) Plan as a pre-tax contribution each pay period.

Automatic Enrollment Notification

Each automatically enrolled participant will receive documentation relating to the 457(b) Plan by the effective date of their appointment. This documentation explains:

1. The employee’s rights under the 457(b) Plan to designate how deferrals and earnings will be invested;
2. How, in the absence of an investment election by the employee, such deferrals and earnings will be invested;
3. The percentage of the employee’s base salary that will be deferred to the program;
4. The employee’s right to increase, reduce, or cease deferrals to the program;
5. How an employee may elect investments and change or cease deferral amounts under the 457(b) Plan; and
6. The employee’s right to make a permissive withdrawal from the plan, and the procedures governing such withdrawals.

Participants who are automatically enrolled must acknowledge in writing that they received this documentation. A legal guardian’s signature is needed if the eligible participant is under 18 years of age.

Participants may elect to defer a different amount to their plan, or to cease making deferrals. An employee who opts out of automatic enrollment may elect to participate again in the 457(b) Plan after a period of 30 days. An eligible employee who was not automatically enrolled in the 457(b) Plan may elect to participate at any time. Eligible employees may elect to participate in the 457(b) Plan by completing a Salary Deferral Agreement through the Employee Self-Service (ESS) portal in the PeopleSoft System. The agreement includes:

1. The option of selecting pre-tax deferrals or after-tax (Roth) deferrals;
2. Amount to be deferred, and;
3. Investment elections.

Deferral Amounts

A participant may designate all or a portion of their deferral amount as a Pre-Tax Deferral or as a Roth Deferral. Participants may change their deferral amount by completing the Salary Deferral Agreement. The change will take effect no earlier than the first day of the first pay period following the date the agreement is executed in ESS.

1. Participant’s may elect to defer the following amounts:
   1. A minimum of $20 per pay period;
   2. A minimum of $43 per month; or
   3. A maximum of $19,000 per year, up to $25,000 if age 50 or over, or up to $38,000 if qualified for pre-retirement catch-up contributions as set by § 457(b)(2) of the Internal Revenue Code (for tax year 2019). 

Participants may defer more than the annual deferral limit if they qualify to use one of the following “catch up” provisions:

1. Age 50 and over: Participants may defer a higher amount during any year they reach age 50 or older. The maximum deferral amount each year is the sum of the annual deferral amount for the current taxable year plus the over 50 catch up amount established by the Internal Revenue Service (IRS); or
2. Three Years before normal retirement age: Participants may defer a higher amount during a period of three consecutive years immediately preceding the taxable year in which they reach normal retirement age. The maximum amount participants may defer during each of the three years is the lesser of:
   1. Twice the annual deferral limit; or
   2. The sum of the annual deferral limit for the applicable years, plus the portion of the annual deferral limit for prior taxable year that the participant has not previously used.

Any deferral that exceed the maximum amount authorized will be refunded to the participant.

For employees of the Council of the District of Columbia, the Office of the District of Columbia Auditor, and the Office of Advisory Neighborhood Commission, the District government matches employees’ 457(b) Plan deferrals, up to three percent of the employee’s base salary per pay period. The District will match these deferrals by making contributions to the 401(a) Plan within 45 days after the end of each pay period.

The District does not match deferrals made to 457(b) Plan accounts for any other employees.

Participants will be given an opportunity to direct investments of their respective accounts to one or more of the investment funds offered by the 457(b) Plan.

If a participant did not direct how the funds are to be invested, their deferrals will be invested in the default fund selected by the 457(b) Plan provider until additional instructions are provided by the participant.

Participants may cancel their participation in the 457(b) Plan at any time, as follows:

1. Cancellation must be made through ESS;
2. The cancellation will take effect on the date of the request and be reflected on the pay check issued for the 1st full pay period following submission of the request; and
3. Participants who previously cancelled their account may participate again by completing a new Salary Deferral Agreement through ESS.  

A Participant’s enrollment in the 457(b) Plan terminates when one of the following occurs:

1. The participant terminates employment with the District; or
2. The participant ceases to be eligible to participate in the plan.

Participants who cease to be eligible to participate in the 457(b) Plan, but who remain employed with the District, are entitled to withdraw all funds from their account upon separation of employment, except as outlined in the 457(b) Plan Automatic Enrollment Program section.

Refunds

An automatically enrolled participant who elects to cease deferrals during the first 30 days of employment may request a refund of any deferrals made to their account within that period. Refunds will be adjusted for any earnings or losses at market value and will be taxable in the year they are distributed to the participant. To request a refund of deferrals, contact DCHR’s Benefits and Retirement Administration at [email protected] or (202) 442-7627.

An automatically enrolled participant who does not opt out within the first 30 days of employment is not eligible for a refund and will be subject to the 457(b) Plan’s normal distribution rules. For additional information, see the distribution options section.

Refund requests will be processed within 60 days of receipt of a request to withdraw deferrals.

Participants may not withdraw funds from their account, except under the following circumstances:

1. Separation from the District;
2. Death;
3. Attainment of age 70 ½; or
4. A severe financial hardship.

Participants may elect the time (month and year) when distributions under the 457(b) Plan will begin. The date must be the earlier of:

1. Thirty-one days after separation from the District; or
2. The date the participant reaches age 70 ½.

Roth deferrals and associated earnings may be withdrawn tax free if:

1. Five years have passed since January 1 of the year of the participant’s first Roth deferrals; and
2. The participant is at least 59 ½ years old, disabled, or deceased.

If a participant dies before distribution of their account, then the beneficiary must submit a death certificate proving the death of the participant before distribution of the participant’s account.

Participants may request a distribution due to a severe financial hardship by applying for an emergency withdrawal using the “District of Columbia 457(b) Deferred Compensation Plan, Application for Unforeseeable Emergency Withdrawal Form,” available at http://www.dcretire.com.

Participants eligible to receive a distribution may choose from the following options:

1. Lump sum payment;
2. Installment payments for a designated period, including monthly, quarterly, semi-annual, and annual installment payments;
3. Annuity payments; or

Direct rollover to another employer-sponsored, eligible retirement plan or to a traditional IRA.

Participants in the 457(b) Plan may increase, reduce, or cease the amount of their deferral through ESS in PeopleSoft. To stop or change the deferral amount, follow the steps in the How to Change Your 457(b) Plan Contribution Guide. Participants may also contact the DCHR Benefits and Retirement Administration at [email protected] or (202) 442-7627. Automatically enrolled participants can only request a refund of their deferrals, if they opt out of the plan within the 30 days of employment.

457(b) Plan Resources

Participants may obtain additional information on the 457(b) Plan, including frequently asked questions at https://dchr.dc.gov/page/457b-deferred-compensation-plan  or www.dcretire.com.

Any questions related to the content of this issuance should be directed to the DCHR’s Benefits and Retirement Administration at [email protected] or (202) 442-7627.

Authorities

1. D.C. Official Code § 1-626.05(2);
2. D.C. Official Code § 1-626.07(a);
3. D.C. Official Code § 1-626.09(b);
4. D.C. Official Code Title 47, Chapter 36m;
5. Chapter 26 of the District personnel regulations, Retirement Benefits*; and
6. Mayor’s Order 2019-033, Delegation of Authority - Employee Deferred Compensation Program, dated May 7, 2019.