RSA-1 Deferred Compensation Program

201 South Union Street
Montgomery, AL 36130-2150
1.877.517.0020
http://www.rsa-al.gov/

The RSA-1 Deferred Compensation Plan allows an employee to defer receipt of a portion of his salary until some later determined date, usually at retirement or termination of employment. There are no administrative or membership fees to participate in the RSA-1 program. The RSA-1 fund is a fixed income portfolio investing primarily in mortgages, bonds, and other debt securities. Earnings are credited to participants' accounts on March 31 and September 30.

Eligibility: All full-time regular faculty and staff who are members of the Teachers' Retirement System.

Costs: Employees choose a dollar amount to contribute on a monthly basis. Annual deferrals may not exceed $15,500 per year or $20,500 per year for employees over age 50. As of January 1, 2002 this deferral maximum does not coordinate with 403 (b) tax shelter contributions. Therefore, an employee may tax defer maximum dollars to both TIAA/CREF and RSA-1. The amount of deferral may be changed as often as desired.

Benefits: Amount of lump sum or equal payments would depend upon the number of years of participation as well as amount of contributions made each year.

Taxes: Participation in RSA-1 is on a tax-deferred basis. Deferred income and investment earnings distributed from RSA-1 will be taxed to the employee or beneficiary as ordinary income in the year of distribution. No penalty tax is imposed on distributions from a Section 457 deferred compensation plan such as RSA-1 regardless of the recipient's age at the time of distribution. That is the 10% penalty for early withdrawal does not apply.

Availability of funds: RSA-1 is NOT a savings account in which participants make periodic withdrawals. Rather, it is a retirement account that is accessed only after the participant has retired or terminated employment.

Method of Distribution: At time of separation from service, the participant has the following distribution options: lump sum payment, receive a partial lump sum payment and begin monthly disbursement, receive a monthly disbursement, or delay distribution of the funds. Current IRS regulations require that distribution begin not later than April 1 of the calendar year following the calendar year the employee attains age 70 1/2 or retires, whichever is later.