March DC Update: Working With Financial Professionals
Financial Advisor Solicitations
Did you or someone in your agency recently receive communication from a financial advisor claiming to be associated with the State of Missouri Deferred Compensation Plan? Please be advised that only official plan education specialists are authorized to provide guidance and education on the deferred compensation plan. Unless you are contacted by one of the following representatives, we strongly encourage you to be suspicious of any individual who claims to be affiliated with the deferred compensation plan or have knowledge of its investment options.
Those education specialists include:
- Tasha Reinkemeyer
- Jonathan Binkley
- Don Wilson, CFP®
- Dale Stuckey
- Dale Rippelmeyer
- David Gibson
- Deborah Taylor
Deferred compensation plan education specialists are not financial advisors. They DO NOT receive a commission on the money employees contribute to the deferred compensation plan or the investment options they choose inside the Plan. Their chief objective is to help educate state employees on the value of this important benefit.
If you have any questions or concerns related to financial advisor solicitations, please contact the deferred compensation plan at 800-392-0925. And be sure to tune in to next month’s edition of the DC Update as we go in-depth on working with financial advisors.
Tax Fraud
As you may have heard in the news, thousands of fraudulent tax returns were recently filed using a popular online tax filing service. Unfortunately this activity has hit close to home as a number of deferred compensation plan participants have reported fake returns filed in their names.
If you think a fake tax return was filed in your name, it’s a must that you report the theft directly to the identity protection division of the IRS. Victims will need to fill out an Identity Theft Affidavit to create an alert on their account. It also may be prudent to check your credit report to ensure attackers haven't used your personal information to take out loans or open new credit cards.
On a local level, we're encouraging Plan participants who think they may have be affected by this scam to complete the following:
- Access your online account at modeferredcomp.org and reset your User ID and password. To do this, click on the My Profile button in the left menu and navigate to the blue “Change User ID” and “Change Password” buttons within the Login Information section of that page.
- If you commonly use the Plan’s phone service to access your account, please be sure to update that PIN number.
- And finally, complete a notarized Access Code Authorization Form for an additional layer of phone security. This form is available by logging on to Account Access, clicking on the Resources tab, navigating to the "View/Request forms" button in the left menu and clicking on the "Client Communications" button beneath the Documents Available by Email section.
Now That's a Great Question
Every so often we like to highlight popular participant questions in a segment we call Now That’s a Great Questions. This month’s great question is: What’s the difference between the deferred compensation plan and an IRA?
You do have options when it comes to choosing a retirement savings account. An Individual Retirement Account or Arrangement, also known as an IRA, is one of the more popular options available to savers. To be clear, the deferred compensation plan and IRAs are both retirement savings accounts. The deferred compensation plan is an employer-sponsored 457(b) plan, meaning it’s only available to government employees through their employer. IRA’s, on the other hand, are available to any individual interested in saving for retirement. Therefore, IRA’s are not employer-sponsored retirement savings plans.
The other major difference between these two account types is the amount of money the IRS allows savers to contribute to each. For instance, in 2015 regular deferred compensation plan savers can contribute up to $18,000 each year, savers over 50 can contribute up to $24,000 annually, and those within 3 years of normal retirement eligibility can save up to $36,000 a year (double the annual allowable amount). On the other hand, the 2015 IRA contribution limit sits at $5,500, while those over 50 can contribute an additional $1,000 each year, for a total of $6,500 in possible retirement savings.
Another major difference you will notice between IRAs and the deferred compensation plan are the fees charged to participate and the cost of the investment options available inside each plan. For the deferred compensation plan, savers pay $1 per month to participate and about twenty-two basis points (or .22 percent) on the Plan’s most popular investment option – the Missouri Target Date Funds. As for IRAs, participation fees and investment options and expenses will vary depending on the financial institution sponsoring the retirement account and the investment options available inside the account.
Finally, another common difference between these two savings options involves accessing your money in retirement. For your pre-tax savings in the 457 plan, you’ll enjoy penalty-free access to your money prior to age 59 ½ as long as you are separated from state service. As for Traditional IRAs, in many cases you may not be able to withdraw your money before age 59 ½ without paying that 10% early withdrawal penalty.
While the choice of which retirement savings option to use is certainly yours, please be aware of the features that differentiate these account types. For more information on the deferred compensation plan and IRAs, see the Understanding Your Retirement Savings Options flier found on the Plan Publications page.
Auto Enrollment Report
Since the auto enrollment initiative began in July of 2012, more than 9,000 new state employees have started their savings journey with the deferred compensation plan. That equates to more than 87% of all new employees hired by the state! Cumulative auto enrollment statistics by department, as of February 2015, are detailed below.
Please note: Detailed data for agencies with 10 or fewer hires is omitted in this report.
| Department | Total AE | Opt Out | Net AE | AE Success Rate |
|---|---|---|---|---|
| State Auditor |
20
|
0
|
20
|
100.00%
|
| Office of Administration |
232
|
16
|
216
|
93.10%
|
| Dept of Corrections |
2590
|
217
|
2373
|
91.62%
|
| DESE |
269
|
28
|
241
|
89.59%
|
| Social Services |
1819
|
199
|
1620
|
89.06%
|
| Labor & Industrial Relations |
73
|
8
|
65
|
89.04%
|
| Health & Senior Services |
348
|
39
|
309
|
88.79%
|
| Revenue |
282
|
34
|
248
|
87.94%
|
| Transportation |
701
|
87
|
614
|
87.59%
|
| Natural Resources |
181
|
23
|
158
|
87.29%
|
| Ins, Fin Inst, Prof Reg |
75
|
10
|
65
|
86.67%
|
| Secretary of State |
52
|
7
|
45
|
86.54%
|
| Judiciary |
691
|
96
|
595
|
86.11%
|
| Conservation |
102
|
15
|
87
|
85.29%
|
| Public Safety |
1146
|
169
|
977
|
85.25%
|
| Agriculture |
54
|
8
|
46
|
85.19%
|
| Mental Health |
1978
|
329
|
1649
|
83.37%
|
| State Public Defender |
206
|
39
|
167
|
81.07%
|
| Econ Development |
124
|
25
|
99
|
79.84%
|
| Attorney General |
118
|
24
|
94
|
79.66%
|
| Legislature |
198
|
44
|
154
|
77.78%
|
| Higher Education |
-
|
-
|
-
|
-
|
| Housing Development Commission |
-
|
-
|
-
|
-
|
| Missouri Consolidated Healthcare |
-
|
-
|
-
|
-
|
| MOSERS |
-
|
-
|
-
|
-
|
| State Treasurer |
-
|
-
|
-
|
-
|
| Highway & Highway Patrol |
-
|
-
|
-
|
-
|
| Governor's Office |
-
|
-
|
-
|
-
|
| DNR |
-
|
-
|
-
|
-
|
| Lt. Governor |
-
|
-
|
-
|
-
|
| TOTALS |
11309
|
1425
|
9884
|
87.40%
|
Stay Connected with the Plan on Facebook, Twitter, LinkedIn and YouTube
For more information on financial professional, be sure to check out the first quarter edition of our Simply Put newsletter, which mails with this month’s first quarter statements and will also be available at modeferredcomp.org and on the Plan’s social media channels. The plan’s pages on Facebook, Twitter, LinkedIn, and YouTube are always a great way to receive the most up-to-date news and savings information.