Catch-up for lost time with your Lump Sum Separation Pay
You can use your Lump Sum Separation Pay to help boost your retirement readiness, defer taxes, and use the funds as you need them.
Download Form
When you retire, you will have to determine what to do with the value of your unused leave time. This can include a cash payment to you, which would result in taxable income, or you can contribute all or a portion of this amount into your Savings Plus account.
Contributing your Lump Sum Separation Pay allows you to:
You can defer this payment - and the associated tax - by transferring your lump sum payment to a Savings Plus 401(k) or 457(b) account, and you will avoid paying taxes on the funds until withdrawn.
If you separate between November 1, and December 31, you may be able to transfer up to the maximum contribution limit for the current tax year and for the following tax year. This may help you avoid a large tax bill. To maximize the amount you can contribute, use both the 457(b) and the 401(k) to defer up to $60,000 in 2023, and $61,000 for 2024. If your Lump Sum Separation Pay is more than this, you may be able to utilize Traditional Catch-up.
How it works
Frequently asked questions
Expand all
The opportunity to defer a portion or all of one’s unused vacation and annual leave (minus Social Security and Medicare) upon separation from state service to the Savings Plus 401(k) and/or 457(b) plan.
Yes. When using both accounts you can contribute up to the max IRS limit for each plan type, for the year.
Yes. If your Lump Sum Separation Pay exceeds the allowable limit, depending on your age, you can use age based catch-up, and if needed apply for Traditional Catch-up, to maximize your allowable amount. If you are approved for Traditional Catch-up, you will need to attach the approval letter to your Lump Sum Separation Pay form when it is submitted.
Your Lump Sum Separation Pay should show in your Savings Plus Account within two-and one-half months after your separation date. If this is not showing within this timeframe, please reach out to Human Resources for status.
If you are not currently enrolled in the Savings Plus plan, you will need to enroll prior to receiving your funds. You can enroll online now. If you are already enrolled in one plan type, but not the other, no further action is needed.
We recommend that you open your account when you submit your lump sum election form. This allows you to select your investments and sign up for online access. You not to open an account before your funds are received, an account will be opened for you, and your funds will be placed in a Target Date Fund based on your date of birth. In this case, you would be able to make changes to your investments once the funds have arrived.
Workdays are counted as each day, Monday through Friday, excluding Saturdays, Sundays and legal holidays. Please note when the legal holidays occur, and the days in which they are observed.
For Pre-tax amounts, taxes are not withheld, until you take your funds from your Savings Plus account. Roth contributions are taxable in the year the contribution is made. You can make a Roth contribution with your lump sum, but the appropriate taxes will be deducted.
Yes. You will have access to the funds in your account, for when you need them.
You will need to review your W2s and the Traditional Catch-Up Guide to complete the Form and return to Savings Plus with your W2s. We will then send you an approval letter that you will need to provide to your HR office with your Lump Sum election form. You may also wish to attend a webinar or review the tutorial video on the website for assistance.
We suggest that you submit your Traditional Catch-Up Form at least 60 days prior to your separation date. This will allow time for processing and receipt of your approval letter which must accompany your Lump Sum election form.
We recommend that you locate all underutilized amounts in previous years and apply for an increased amount beyond existing limits as these limits typically do increase each year. Allowing an additional $1,000 to $1,500 should be adequate. Amounts cannot be changed after the deadline has passed, which is 5 workdays prior to your separation date.
Savings Plus can indicate if the funds have arrived, however if the funds have not arrived, you would need to contact your HR specialist to determine when the paperwork was submitted and if the State Controllers Office has contacted them with any issues regarding your paperwork.
No. This would make the form not in good order and will be rejected by the State Controllers Office. You must write in an amount. As an example, you could write in $30,000 for 2024 in 457(b) Pre-tax if you are over age 50.