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Deferred Compensation Plans The Lexington-Fayette Urban County Government offers full-time employees three options to participate in deferred compensation plans including two 457 plans and a 401(k) plan. Eligible employees may choose to join both a 457 plan and a 401 (k) plan. ICMA-RC 457 Deferred Compensation Plan Kentucky Deferred Compensation 401 (k) and 457 Plans Present federal legislation (Sections 401K and 457 of the Internal Revenue Code) allows an employee to place, via payroll deduction, a portion of their income in an interest-bearing account before taxes. In a calendar year an individual can place up to $15,000 of their annual salary in an account and not pay federal or state taxes on the amount deferred or the interest gained until it is withdrawn. However, there are restrictions on withdrawal of the funds and these restrictions differ for 457 and 401 (k). Hardship withdrawals are allowed in some cases (for an emergency withdrawal, death or disability) but penalties may apply. Full-time employees interested in learning more about these programs or setting up a deferred compensation program can do so by contacting the Division of Human Resources - Benefits Section. |
