Get the Facts

What is Savings Plus?

Savings Plus is a voluntary retirement program that allows you to supplement your retirement benefits through tax-deferred and Roth after-tax payroll contributions. Savings Plus offers a 401(k) Plan and a 457(b) Plan. You must be an employee or officer on the Payroll of the State who is eligible to participate in California Public Employees’ Retirement System ("CalPERS"), Judges’ Retirement System (including the Judges’ Retirement System II Law) ("JRS"), Legislators’ Retirement System ("LRS"), or California State Teachers’ Retirement System ("CalSTRS").

The 401(k) and 457(b) plans are explained in more detail below.

Savings Plus Mission Statement

To enthusiastically serve our fellow California State employees and their families by empowering them to achieve and maintain a brighter financial future.

Savings Plus Vision Statement

To be recognized as the best choice for retirement savings by California State employees and their families.

What are the Plan types?

Savings Plus has created multiple plans to allow employees like you to put aside money from each paycheck toward retirement. These plans may help bridge any gap between what you have in your pension, savings and Social Security, and how much you will need in retirement, including the time after retirement and before you start drawing on Social Security.

Savings Plus also administers the Alternate Retirement Program (ARP), a retirement savings program for certain state employees hired between August 11, 2004 and June 30, 2013, and the Part-time Seasonal Temporary (PST) Program for employees who are not covered by a retirement system.

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One of the decisions you face when you sign up for Savings Plus is which plan may be right for you: 401(k) or 457(b) (our plan comparison chart summarizes the two plans side by side). You can enroll in both, but that also means you will pay administrative fees for both.

401(k) Plans and 457(b) Plans have some things in common. For instance, both allow for before-tax contributions, Roth contributions, and rollover contributions from prior employer plans. Both plans limit withdrawals to qualifying circumstances. After all, these are retirement accounts, not ordinary savings accounts. Both allow for age-based deferrals (age 50 or older).

There are key differences between the 401(k) Plan and 457(b) Plan:

  • If you plan to retire before age 55 and begin withdrawals immediately, you should know that early withdrawal penalties apply to the 401(k), but not the 457(b) Plan.
  • You can withdraw funds from a 401(k) for a home purchase or college tuition, but not from a 457(b) account.
  • The 457(b) plan contains a "catch up" provision that allows you to contribute a higher amount to make up for the years that you were eligible to contribute but did not contribute the maximum, as long as you remain a State employee during the time you contribute at the higher amount.

Once you contribute money to one of these plans within Savings Plus, it must remain in that plan until you are eligible for distribution.

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Savings Plus offers you two ways to save for retirement:

  • Pre-tax contributions, which allow you to defer paying taxes on your contributions and any earnings until you withdraw your assets, generally during retirement.
  • Roth after-tax contributions, which come out of your pay after taxes are deducted and generally will not reduce your current tax liability. A note about 401(k) and 457(b) Plan After-Tax Roth distributions:
    • If you meet any of the following criteria, you can receive payment from your 401(k) Plan without an additional 10% tax for early withdrawal:

      1. Separated from State service during or after the year you turned age 55; or
      2. Separated from State service during or after the year you turned age 50 if you are a public safety employee; or
      3. Attainment of age 59½, regardless of your employment status.
    • A note about 401(k) and 457(b) Plan After-Tax Roth distributions:
    • A Roth distribution will be tax free if the distribution is made 5 years or more after January 1 of the calendar year in which the first Roth contribution or Roth conversion was made and the distribution was made on account of death, disability, or attainment of age 59½.

Even if you expect to get a pension or Social Security benefits, it may not be enough for your retirement. The additional income you receive from your Savings Plus account can be one of the keys to your future financial security.

If you contribute to both pre-tax and after-tax Roth contributions, you can elect to make separate investment choices: one for your pre-tax contributions and one for your after-tax Roth contributions. Note that this feature does not apply to investments to the Schwab Personal Choice Retirement Account (PCRA).

Learn more about enrolling with Savings Plus.

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Pre-tax and Roth after-tax options were created as long-term investment vehicles for employees to generate supplemental income for retirement. It is important to start saving as early as possible so your money has the ability to compound and grow. The Savings Plus account is not like an ordinary savings account that you may access whenever you like.

While your savings plan is intended for your retirement, you may be able to borrow money from your account and pay your account back with interest. You also may be able to withdraw money if you meet the criteria for an unforeseen emergency, in-service withdrawal, or hardship.

Remember: the money you put in a Savings Plus account is supposed to be for your retirement. Consider carefully how much you can afford to contribute to your account(s).

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One of the most important steps to planning your retirement future is to determine the amount you can contribute to your account(s). Savings Plus allows participants to begin contributing with a minimum contribution amount of $50.00 per month. Increasing your contributions when possible, can make a big impact on your retirement accounts.

Maximum contribution limits are determined by the IRS each year. Understanding the IRS annual contribution limit is important, especially when your goal is to contribute the maximum amount to your account each year. Even if you cannot contribute the maximum amount, increasing your contribution a little each year can help you move closer to your retirement goals.

Learn more today

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You are eligible to enroll in a Savings Plus 401(k) and 457(b) plan if you: 

  • Are currently employed by the State of California or the California State University (CSU) system, and you are eligible for membership in CalPERS, the Legislators' Retirement System, or the Judges' Retirement System
  • Separate from State and CSU system employment and return to service as a "rehired annuitant" (The term "rehired annuitant", used in the CSU system, is also known as "retired annuitant" among State employees)
  • Are in the Alternate Retirement Program (ARP)

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