What is Savings Plus?
"Savings Plus" is the name of the 401(k) plan and 457 plan available to most State of California employees, including employees of the Legislature, Judicial, and California State University (CSU) system. These plans allow you to invest in your future by building a retirement savings account using payroll deductions that go into investments you select from the diverse Savings Plus fund lineup.
The 401(k) and 457 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 can help bridge the gap between what you have in your pension and Social Security, and how much you’ll need in retirement.
Savings Plus also administers the Alternate Retirement Program (ARP), a retirement savings program for certain state employees hired on or after 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.
- Alternate Retirement Program (ARP)
- Part-time, Seasonal and Temporary (PST) Employees Retirement Program
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.
Savings Plus offers you two ways to save for retirement:
- Before-tax contributions, which allow you to delay paying taxes on your contribution (or account earnings) until you withdraw the funds, generally during retirement.
- Roth contributions, which come out of your pay after taxes are deducted and generally will not reduce your current tax liability. However, your Roth contributions and related earnings are withdrawn tax-free at the time of distribution as long as the Roth contributions have been in the plan for at least five years. In addition, you must be 59 1/2 in order for the potentially significant tax break if you are in a higher income tax bracket when you retire than when you make the contributions.
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.
Whether your retirement is a long way off or coming up fast, the sooner you start a Savings Plus account, the better.
If you contribute to both before-tax and Roth you will have the ability to make separate investment choices: one for your before-tax money and one for your Roth money. This feature allows you to invest before-tax and Roth monies with different time horizons in mind. Note that this feature does not apply to investments to the Schwab Personal Choice Retirement Account (PCRA).
Learn more about enrolling with Savings Plus.
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).
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)