STATE EMPLOYEES
RETIREMENT COMMISSION
COMPTROLLER'S SEAL STATE OF CONNECTICUT 55 ELM STREET
HARTFORD, CONNECTICUT
06106-1775
TELEPHONE: (860) 702-3480
TELEFAX:(860) 702-3489
MEDICAL EXAMINING BOARD
for DISABILITY RETIREMENT
HEALTH CARE COST
CONTAINMENT COMMITTEE
STATE OF CONNECTICUT
RETIREMENT AND BENEFIT SERVICES DIVISION
OFFICE OF THE STATE COMPTROLLER

Retirement & Benefit Services Division Memorandum

March 13, 2003

TO THE HEADS OF ALL STATE AGENCIES

ATTENTION: Personnel and Payroll Officers, Chief Administrative and Fiscal Officers and Business Managers
SUBJECT: 2003 Early Retirement Incentive Program for Employees Participating in the State of Connecticut Deferred Compensation (457) Plan and 403(b) Program

I. INTRODUCTION

As announced in Retirement & Benefit Services Division (Division) Memorandum dated March 7, 2003, the State of Connecticut enacted an Early Retirement Incentive Program (ERIP) for certain members of the State Employee Retirement System (SERS). The purpose of this communication is to discuss the effect on employees participating in the State of Connecticut Deferred Compensation (457) Plan and/or the 403(b) Program who retire under the ERIP.

II. DISCUSSION

By its terms, the ERIP stipulates that payment to participating SERS members for unused vacation and sick leave will be made pursuant to the following schedule: one third of the amount owed on July 1, 2005; one third of the amount owed on July 1, 2006; and one third of the amount owed on July 1, 2007. The State may, at its option, make the payment in one installment on or before July 1, 2005, if the total amount owed is less than $2,000.

In accordance with applicable provisions of federal law, accrued vacation installment payments made under the ERIP may not be tax-sheltered under either the 457 Plan or the 403(b) Program. However, if the State elects its option to make payment of accrued vacation leave in one installment in a SERS member's final paycheck, such member may elect to defer said payment to the 457 Program and/or the 403(b) Plan, in accordance with applicable contribution limits. Payment for accrued sick leave may not be deferred under any circumstances.

By way of explanation, Internal Revenue Code, Section 457(b)(1) directs that a state's deferred compensation plan shall be available only to "individuals who perform service for the employer." Along these lines, Internal Revenue Code, Section 403(b)(1)(A)(ii) restricts participation in tax sheltered annuity plans to "an employee who performs services for educational organizations." Active employment status is, therefore, a precondition for eligibility to participate in either the 457 Plan or the 403(b) Program.

III. ADMINISTRATION

Upon retirement from state service, the Division will notify affected SERS members in writing of options available under the 457 Plan and the 403(b) Program, and provide each with a Form CO-784, "Distribution Election Eligibility Application", along with a pre-addressed return envelope. For your information, the following options are available: (1) leave accumulations in the 457 Plan or the 403(b) Program; (2) commence receipt of benefits; or (3) "rollover" accumulations into another qualified retirement plan or individual retirement account.

IV. CONCLUSION

Inquiries related to the management and administration of the 457 Plan and the 403(b) Program may be directed to the Division's EBU at (860) 702-3543.

SERS members with questions concerning options available to them upon retirement should be directed to their FSOs at the telephone numbers listed below:

Deferred Compensation (457) Plan
FSO Telephone
The Hartford (888) 457-7824
ING Financial Advisers (800) 784-6386
Phoenix (800) 243-1574

 

403(b) Program
FSO Telephone
Fidelity Investments (800) 343-0860
The Hartford (800) 243-5868 press option 1
ING Financial Advisers (800) 784-6386
Oldham Resource Group (800) 626-6106
TIAA-CREF (888) 842-5350 - on weekdays
(800) 842-2888 - on weekends
Travelers Life & Annuity (800) 842-4015

 

Very truly yours,

NANCY WYMAN, STATE COMPTROLLER

BY:

Steven Weinberger, Director
Retirement & Benefit Services Division 

SW/NM/sa

Return to Index of 2003 Retirement Division Memoranda
Return to Index of Comptroller's Memoranda
Return to Comptroller's Home Page