Texa$aver 401(k) / 457 Program
Texa$aver is a voluntary retirement savings program offered through ERS. Texa$aver can help you save for your future today.
Many financial experts agree that you will need 70-100% of your income to maintain your current way of life in retirement. And while you may receive money in the form of a pension and Social Security benefits when you retire, that may not be enough. The ERS retirement plan does not provide automatic annual cost of living adjustments (COLA). And while you may receive money in the form of a retirement annuity and Social Security benefits when you retire, that may not be enough.
That's where the Texa$aver 401(k)/457 Program comes into play.
You already contributed to the ERS retirement fund, with the State and the agency you work for also contributing on your behalf, but your ERS annuity may replace only about 50% of your salary when you retire. State of Texas Retirement does not include automatic cost-of-living adjustments (COLAs). During retirement, a Texa$aver account can help you weather inflation and things like increased medical expenses as you age.
- Sign into your account on the Texa$aver website to enroll in or make changes to your 401(k) or 457 Plan any time of the year.
- Choose between the 401(k), 457, or both accounts, if offered by your employer.
- Decide how much should come out of your paycheck before taxes each month. (Use the Texa$aver Resource Center to help you decide. Review the minimum/maximum contributions per year.)
- Choose your investments. The Texa$aver Advisor Service can help with your choices.
Important note: As part of the enrollment process, make sure you designate a beneficiary for your account in the event of your death. This is different from your ERS retirement beneficiary designation.
- expertly managed,
- well diversified across a range of asset classes and investment styles,
- invested based on your time frame until retirement (becoming more conservative as you move to retirement), and
- each month the Fund is automatically balanced between stocks, bonds, and cash.
If you are age 50 or older by year-end, you are automatically eligible to participate in the Age 50 and Over Catch-up. If you contribute the maximum amount, you can make an additional $6,000 "catch-up" contribution annually.
A direct rollover is when a distribution from your former employer is made to your Texa$aver 401(k) or 457 Plan. This lets you avoid a 20% withholding by the IRS. Follow these steps:
- Complete the appropriate Incoming Transfer/Rollover Request form, sign it, and mail it to the address on the form. Include a copy of your statement from your former employer's retirement plan.
- Once you receive an approval letter, complete your previous employer's required form using the payment instructions indicated in the approval letter.
An indirect rollover is when you get a check from your previous employer 401(k) or 457 Plan. The previous employer usually withholds 20% of this check for federal income tax. Follow these steps:
- Complete the appropriate Incoming Transfer/Rollover Request form.
- Sign the form and mail to the address on the form. Include a copy of your statement from your previous employer's retirement plan and the check for the amount you are transferring.
- To avoid an IRS penalty, mail the rollover distribution check within 60 days of receipt.
In the last three years prior to retirement, you may defer up to double the normal Section 457 contribution limit. Visit the Texa$aver website for annual limits and more information.
You can initiate a distribution after you leave employment by submitting a distribution form. Use the Distribution/Direct Rollover Request form available from the Texa$aver website. Payout options include:
- periodic payments,
- partial distributions,
- roll over part or all of the balance into another qualified plan or an IRA or
- take all of the money as a lump-sum distribution.
Generally, taxes are withheld at 20% of any amount you withdraw from your account.
Age 59½ withdrawals can only be taken from your 401(k) account if you are age 59½ or older. You will not have a penalty; however, a 20% tax on your withdrawal will be withheld if the funds are not rolled over to an IRA or other qualified plan. Funds that are rolled over will not be subject to taxes at that time. For more information or withdrawal assistance, please call the Texa$aver customer service center at (800) 634-5091.
Financial hardship withdrawals can be taken for any of the following reasons:
- payment of non-reimbursed medical expenses,
- purchase of your primary residence,
- prevent eviction from or foreclosure on your primary residence,
- qualified post-secondary education expenses,
- funeral expenses for family members and
- principal residence repair.
Note: Distributions are subject to federal income taxes.
- If you have turned 70½ in the calendar year, you will have until April 1 in the following calendar year to take your required minimum distribution.
- If you are still employed, and you have already begun taking your required minimum distribution, you may choose to stop receiving distributions until you retire.
- If you have retired and do not take the required minimum distribution in a given year, you will be penalized 50% of the amount that should have been distributed.
If you're under age 59½, you may have to pay an additional 10% when you file your tax return. If you are still working when you are 59½, you can take money out of your 401(k).