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.

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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:

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Maximize your contribution

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Boost your retirement readiness

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Apply an investment strategy that's right for you

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Create your own withdrawal strategy for when you need it

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your lump sum payment to a Savings Plus 401(k) or 457(b) account, and you will avoid paying taxes on the funds until withdrawn.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

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Determine the amount you would like to contribute, and for what years

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Determine where to put your money, and if Traditional Catch-Up is needed

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Submit the Lump Sum Separation Pay form to your personnel office 30 days prior to separation of service.

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Need help? Contact the Savings Plus Solutions Center at (855) 616-4776

Frequently asked questions

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