AIG Retirement 1-800-448-2542

Background
In 2000 the County adopted the Bencor Governmental Employers Special Pay Plan, a plan authorized under §401(a) of the federal tax code. It required employees terminating employment to contribute the pay for their accrued leave balances (equal to or greater than $2500) into an account for investment on a pre-tax basis. It also allowed the County to save the payroll taxes on the pay of these leave balances.

Plan Changes
Changes with respect to the third party administration caused the County to secure a new administrator, AIG Retirement (VALIC). Further, without other substantive contributions to the plan, favorable tax treatment is no longer possible. In the current financial climate such contributions are not possible. Therefore a decision was made to restate the plan with AIG Retirement (VALIC) and freeze the plan. Terminal pay processed prior to March 24, 2008 was eligible for the plan; however no further contributions went to Bencor after the March 21 pay date.

How do the changes affect me if I leave County employment?
Employees who have already contributed up to 500 hours into Bencor upon entering DROP and others whose terminal pay went to Bencor prior to March 24, 2008 have seen no change. AIG Retirement (VALIC) was the financial custodian of the funds with Bencor and continues in that role and balances in participant accounts were unaffected.

Contributions are no longer permitted for tax savings for employees receiving their final payout after March 24, 2008.

How can I save taxes on my earnings?
Employees who anticipate a large final payout of accrued leave should consider utilizing the County’s Deferred Compensation program to minimize the tax impact on their final pay. Participating in this program, also referred to as the 457 plan, just makes sense all through the year for tax-deferred growth of retirement savings! Contact your deferred comp representative for details, or Employee Benefits at 464-4570 if you are not currently participating. Here are some savings examples:

• Tax Reduction Example One: If you are leaving employment and expect a final payout of a few thousand dollars, why not contribute this amount to your Deferred Compensation account to lower your tax liability? The maximum contribution for 2008 is $15,500 ($20,500 for employees age 50 and over). If you have not made any contributions this year, contribute up to the max. If you have contributed, but not the max, put the difference into your account.
  
  
• Tax Reduction Example Two: Even if you are not near retirement or leaving employment consider using the Annual Exchange of Leave (June and November) if you have a significant balance in your leave bank. This will help you reduce the size of your leave bank (and taxes due when you leave employment), and can defer income tax, and increase your retirement savings with virtually no impact on your take home pay!

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