Get the Facts

About Deferred Compensation

You've probably heard of the different types of retirement plans: 457(b) Deferred Compensation, 401(k), 403(b), 401(a) and 457(b) Deferred Compensation with both traditional and Roth contributions. As a public employee, there are plans created specifically for you.

Nationwide® has worked with public sector employees for more than 30 years, so we know the kinds of questions you may have about your plan. We'll give you the tools and information to help you feel confident about investing for retirement. Keep in mind that investing involves market risk, including possible loss of principal, and there's no guarantee that investment objectives will be achieved.

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The 457(b) deferred compensation plan is a retirement plan offered by the State of Florida, created to allow public employees like you to put aside money from each paycheck toward retirement. A deferred comp plan can help bridge the gap between what you have in your pension and Social Security, and how much you’ll need in retirement.

Here are some frequently asked questions about deferred comp plans:

  • What sets a 457(b) apart from other retirement plans? 457(b)s may offer benefits other retirement plans can’t, like penalty-free withdrawals once you stop working for your public sector employer.
  • What does tax-deferred mean? Basically, you don’t pay income taxes on your deferred comp plan contributions or earnings until you retire and/or begin to take payments from your account. This may lower your taxable income currently.
  • How much can I put into a 457 plan? Check out the current contribution limits.
  • Can I combine retirement accounts? Our Retirement Specialists will work with you to combine, or consolidate your eligible retirement accounts, including your DROP funds, into your deferred comp account. This may make managing your retirement investments a little easier. For more information about DROP and to see if it is right for you, see the DROP Brochure.

Qualified retirement plans, deferred compensation plans and individual retirement accounts are all different, including fees and when you can access funds. Assets rolled over from your account(s) may be subject to surrender charges, other fees and/or a 10% tax penalty if withdrawn before age 59 ½. Neither Nationwide nor any of its representatives give legal or tax advice. Please contact your legal or tax advisor for such advice.

Get the help you need

The sooner you enroll, the more you can possibly save. Take a look at the Enrollment Checklist to see what you’ll need to have handy and enroll today!



There are three steps to participating in the deferred comp plan:

  1. Enroll in your plan – It’s easy to participate in deferred comp. Contributions are automatically deducted from each paycheck and deposited to your account, so you don’t have to remember to write a check.

    Use the Paycheck Impact Calculator to see how saving pre-tax will affect your paycheck.

  2. Invest your money – You’ll choose funds from the list of investment options available within your plan. Keep in mind, any investment involves risk and there’s no guarantee that any fund will achieve its investment objectives. But, we’re here to help.

  3. Receive income – Many public employees retire earlier than those in the private sector, and if that’s the case, you’ll want to invest enough to live in retirement on your terms. Before you begin taking payments, review our Retirement Checklist to make sure you’re ready to transition from saving to spending.

When you’re ready to receive income, these tips will help you do so wisely. Depending on the plan type you’re invested in, there may also be a 10% penalty on distributions prior to age 59½.

Get more info on how to consolidate your retirement accounts to make managing money easier in retirement.

Get the help you need

The sooner you enroll, the more you can possibly save. Take a look at the Enrollment Checklist to see what you’ll need to have handy and enroll today!



Deferred comp helps put you in control of when, where and how much you invest. And that's just the beginning—here are four more reasons why it's smart to participate in your deferred comp plan:

1. You can start anytime

Your deferred comp plan will work for you whether you're approaching retirement or just getting started investing – putting away money in a tax-deferred account can offer several benefits.

2. Every little bit helps

Even investing a little bit of money can really add up over time – it's just important to get started! And if you continue to bump up contributions on a regular basis, the overall impact to your paycheck may not seem too painful. Consider putting raises or bonuses into deferred comp – it's an easy way to invest a little more.

Take a look at how an investment could potentially grow over time.
Growth Period Ending Balance
Deferral Per Pay Paycheck Impact Annual Pay Reduction Accumulation 10 Years Accumulation 20 Years Accumulation 30 Years
$25 $18.75 $488 $9,304 $27,605 $63,607
$50 $37.50 $975 $18,607 $55,210 $127,214
$75 $56.25 $1,463 $27,911 $82,815 $190,821
$100 $75.00 $1,950 $37,214 $110,420 $254,428
$125 $93.75 $2,438 $46,518 $138,025 $318,035
$150 $112.50 $2,925 $55,821 $165,631 $381,642
$175 $131.25 $3,413 $65,125 $193,236 $445,249
$200 $150.00 $3,900 $74,429 $220,841 $508,856
$225 $168.75 $4,388 $83,732 $248,446 $572,463
$250 $187.50 $4,875 $93,036 $276,051 $636,070
$275 $206.25 $5,363 $102,339 $303,656 $699,676
$300 $225.00 $5,850 $111,643 $331,261 $763,283
$350 $262.50 $6,825 $130,250 $386,471 $890,497
$400 $300.00 $7,800 $148,857 $441,681 $1,017,711
$450 $337.50 $8,775 $167,464 $496,892 $1,144,925
$500 $375.00 $9,750 $186,071 $552,102 $1,272,139
$550 $412.50 $10,725 $204,678 $607,312 $1,399,353
$600 $450.00 $11,700 $223,286 $662,522 $1,526,567
$634 $475.50 $12,363 $235,938 $700,065 $1,613,072

Chart assumptions: Biweekly deferrals, 25% tax rate for paycheck impact, 7% annual rate of return. This hypothetical illustration is not intended to predict or project investment results. It does not assume taxes, fees or account withdrawals during accumulation; if it did, results would be lower. This chart is not intended to project the performance of your deferred compensation account. Investments involve market risk, including the possible loss of principal. Actual investment results will vary depending on your investment and market experience. Income stream durations and amounts are not guaranteed.


3. This plan is made for you

Unlike other retirement plans, a 457(b) deferred compensation plan takes into account that you may retire sooner than workers in the private sector. Generally, you don’t have to worry about paying a penalty for retiring early or beginning to take income from the plan before age 59½.

Read Why Invest Now? to learn why it's smart to get started with your deferred compensation now.

4. You'll get service you can count on

Nationwide is ready and willing to answer your questions. We've been helping public sector employees save for retirement for more than 30 years and our Retirement Specialists have helped educate thousands of employees about investing through their retirement plans. Feel free to call today — we don't charge a fee to work with a Retirement Specialist.

Read more about why Nationwide may be right for you.

Get the help you need

The sooner you enroll, the more you can possibly save. Take a look at the Enrollment Checklist for tips on the information you'll need to have handy and enroll today.



As a participant in your deferred compensation plan, you’ll have access to a wide range of investment options. Your investment options were selected by your plan and can help meet your retirement planning needs. Keep in mind that investing involves market risk, including possible loss of principal. As you get started in the plan, we’ll help you understand market risk and strategies that may help you deal with it.

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Understand your options

The investment choices available to you fall into five major asset classes:

  • Risk-based funds
  • Time-based fund
  • Stock fund
  • Bond funds
  • Short-term investments

There are four classes of stock funds we offer:

  • International stock
  • Small-cap stock
  • Mid-cap stock
  • Large-cap stock

Get the help you need

Talk to a Retirement Specialist about your investment options or learn more about how to choose funds. Information provided by Retirement Specialists is for educational purposes only and is not intended as investment advice.

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We'll even walk you through it. If you need more help, call one of our Retirement Specialists.


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