The Pennsylvania Supplemental Retirement Plan (PSP) is a retirement savings program that offers additional financial security for employees working in the public sector of Pennsylvania. Designed to complement the primary retirement benefits provided by the state's pension systems, the PSP enables participants to contribute towards their retirement through pre-tax payroll deductions. The PSP allows public employees to make voluntary contributions into a tax-advantaged account, helping them build additional savings to support their retirement goals. By participating in the PSP, employees can take advantage of tax benefits, such as the ability to defer paying taxes on their contributions and potential earnings until they withdraw the funds in retirement when their tax bracket might be lower. There are different types of Pennsylvania Supplemental Retirement Plans available, including the Deferred Compensation and the Money Purchase Pension Plan. The Deferred Compensation Plan allows participants to contribute a portion of their salary directly into their PSP account, which can be invested in various investment options, such as stocks, bonds, mutual funds, and more. The plan offers flexibility in choosing the investment options that align with an individual's risk tolerance and financial goals. The Money Purchase Pension Plan is another type of PSP, which provides a defined contribution plan for public employees. Under this plan, both the employer and the employee make contributions into the account, with the eventual retirement benefit being determined by the total accumulated contributions and investment returns. Participants have the option to choose from a range of investment options based on their risk preferences. One significant advantage of participating in the Pennsylvania Supplemental Retirement Plan is the ability to take advantage of employer matching contributions, where applicable. Depending on the employer and plan provisions, the employer may match a certain percentage of an employee's contributions, effectively increasing their retirement savings. The Pennsylvania Supplemental Retirement Plan helps public employees enhance their retirement savings by offering tax benefits, investment options, and potential employer matching contributions. It serves as a valuable tool for individuals seeking to bolster their retirement income and secure a financially stable future.
Pennsylvania Supplemental Retirement Plan
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A supplemental executive retirement plan is a deferred compensation agreement between the company and the key executive whereby the company agrees to provide supplemental retirement income to the executive and his family if certain pre-agreed eligibility and vesting conditions are met by the executive.
The employee's total elective deferrals to all of these plans combined cannot exceed the annual deferral limit ($22,500 in 2023; $20,500 in 2022; $19,500 in 2020 and 2021). See How Much Salary Can You Defer if You're Eligible for More Than One Retirement Plan.
The basic limit on elective deferrals is $22,500 in 2023, $20,500 in 2022, $19,500 in 2020 and 2021, and $19,000 in 2019, or 100% of the employee's compensation, whichever is less. The elective deferral limit for SIMPLE plans is 100% of compensation or $15,500 in 2023, $14,000 in 2022, and $13,500 in 2020 and 2021.
The maximum Social Security benefit in 2023 is $3,627 at full retirement age. It's $4,555 per month if retiring at age 70 and $2,572 if retiring at age 62. A person's benefit amount depends on earnings, full retirement age and when they take benefits.
Supplemental contributions Type of limit2023403b under age 50$22,500403b age 50 and over$30,000Compensation limit (employer's matched retirement contributions are limited to matches made on this amount of salary)$330,000
The 2023 IRS annual limit for regular TSP contributions is $22,500, and the TSP Catch-up annual contributions limit is $7,500. The Catch-up contributions may be made in addition to regular TSP contributions, if you are age 50 or older (or will be turning age 50 in 2023).
A supplemental retirement plan gives your top employees a chance to save more once they've maxed out their contribution to a qualified plan, which can increase engagement and retention.