Wisconsin Deferred Compensation Investment Account Plan, also known as WDC, is a retirement savings program offered by the State of Wisconsin. It is designed to help employees, including public employees, build a nest egg for their retirement years. The plan allows participants to contribute a portion of their pre-tax earnings into various investment options, providing them with a convenient way to save for their future. The Wisconsin Deferred Compensation Investment Account Plan offers a range of investment options to suit different risk profiles and investment preferences. These options include various mutual funds, target-date funds, and stable value funds. Participants can customize their investment portfolio based on their risk tolerance and retirement goals. One notable feature of the Wisconsin Deferred Compensation Investment Account Plan is the ability to contribute to the plan through payroll deductions, making it an effortless way to save for retirement. Participants can choose to contribute a percentage of their salary or a fixed dollar amount, up to the allowable limits set by the Internal Revenue Service (IRS). Another advantage of the Wisconsin Deferred Compensation Investment Account Plan is the potential for tax-deferred growth. Contributions and investment earnings within the plan are not subject to federal income tax until they are withdrawn during retirement, allowing participants to potentially accumulate more savings over time. Participants in the Wisconsin Deferred Compensation Investment Account Plan also enjoy access to a variety of educational resources. These resources include workshops, seminars, and online tools that provide guidance on retirement planning, investment strategies, and managing personal finances. While the Wisconsin Deferred Compensation Investment Account Plan is the primary retirement savings program offered by the state, there are some alternative plans available. These may include the Wisconsin Public Employee Deferred Compensation Program and the Wisconsin Department of Employee Trust Funds Deferred Compensation Program, which may have variations in specific features or eligibility requirements. In summary, the Wisconsin Deferred Compensation Investment Account Plan is a valuable retirement savings program that allows public employees to save for their future through pre-tax contributions and a diverse range of investment options. It provides flexibility, convenience, and potential tax advantages, making it an attractive choice for individuals seeking to secure a financially stable retirement.
Wisconsin Deferred Compensation Investment Account Plan
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FAQ
If you take your deferred compensation payments over a period of 10 years or more, those payments will be taxed in the state where you reside, rather than in the state in which you earned the compensation, possibly reducing your state income taxes.
Depending on your plan provisions, the payment of the deferred compensation can also be structured to reduce your tax liability based on a series of installment payments or lump sum payments based on a specified time. By spreading out the payments, you potentially could reduce your income for each applicable year.
There are two types of deferred compensation plans: non-qualified and qualified. Non-qualified deferred compensation plans are also referred to as Section 409A or NQDC plans. Deferred compensation plans are not required for all employees.
Investing your deferred compensation Your plan might offer you several options for the benchmark?often, major stock and bond indexes, the 10-year US Treasury note, the company's stock price, or the mutual fund choices in the company 401(k) plan.
Deferred compensation plans can be a powerful tool for early retirement goals. Deferring income to retirement might help avoid high state income taxes (ex: California, New York, etc) if you're planning to move to a low-tax state.
Your plan may allow you to schedule ?in-service? withdrawals or distributions so you can access your deferred income prior to retirement to meet other financial goals or obligations. For example, at different points over the years, you may want to buy a new home or pay your child's college expenses.
A deferred compensation plan withholds a portion of an employee's pay until a specified date, usually retirement. The lump sum owed to an employee in this type of plan is paid out on that date. Examples of deferred compensation plans include pensions, 401(k) retirement plans, and employee stock options.
457(b) Assets can be withdrawn without penalty at any age upon separation from service from the plan sponsor, or age 70½ if still working.