Deferred Comp Issue?
A friend writes to us:
For a couple months now, my outside brokerage account has not been syncing with my Chicago Deferred Comp Account. My broker was able to view it (unable to make changes) and advise me on it. However, it hasn’t updated and now this appears:
Someone told me that the City still has some interest in our 457(b)’s and that we do not actually “own it” until we retire and either withdraw or transfer the funds. I haven’t been able to confirm that but I would not put it past the City.
Labels: info for the police, rumors
posted by SCC at 12:02 AM
95 Comments:
However, it hasn’t updated and now this appears:
What appears?
You cannot withdraw your own money, even with the penalties, until you have separated from the department.
It’s kind of like the pension fund. Keep your fingers crossed they have some money to pay you.
Chicago Blended Fix investment option is questionable. I could never find out what was in it. So never used it.
Try logging in using the Nationwide app or web site. I retired and never had any issue taking money out and rolling it into an IRA. Haven’t rolled it all out yet but some of it.
The city does not own your deferred compensation account. It never has. You do. Your contributions are invested in mutual funds or bonds, with various bonds making up the fixed income aspect of your account. The moneys are invested at your discretion and held by Nationwide who charges a fee for the bookkeeping and tax accounting to meet the federal law requirements of a 457 Account which deferred income programs for government employees are designated as. This nonsense seems to come up every year or so. If you do not understand the aspects/benefits of such accounts then do some free on line research or subscribe to the Kiplinger Letter. It is well worth the cost. Don’t cheap out on saving for your future.
Any word on the “drop program”… I heard it’s dead in the water and NOT going to happen in January 2026…
Calling BS. A outside broker can’t advise you on your deferred compensation account. Only a broker can advise you on accounts you have with their company. If they did they would in violation of SEC laws and would be fired. The city has no interest in your differed comp account. It’s your money
it take about 1 week from the time you get a check to when it shows up in the amount. who is handling the money in the mean time
I have no problem logging in and making changes to my account but I don't have an outside account linked to my deferred. I've also heard that we don't "own" it until we retire so if the city goes bankrupt our deferred can be at risk.
It is true.
Your money doesn't exist.
You can't visit it.
It's s numbers game.
The only time you receive the money is upon retirement. When they have to issue you an actual payout for reinvestment, etc.
That's why the city would prefer you leave the money in the 457 plan rather than you rolling it over somewhere else. This way they only have to give you small payments from time to time rather than one big lump sum payout. It's slightly different from a 401k which is always actual money.
A deferred representative explained this to me over 20 years ago at the firehouse.
That's why I rolled mine over within 2 weeks after my retirement.
You do what you think is right.
I put into deferred compensation account for 29 years retired 3 years ago with 950k in it. Moved it to brokerage firm now have 1.2 million. Deferred comp is a good way to go to save for retirement. Don’t listen to all the bs about the city has your money. ON the other hand the pension the city has complete control over Pensions are great I have already got my money that I put in and more in just 3 years. Stop listening to the negative stories about deferred compensation, it’s only sour grapes from people that did not put not it.
Wrong you can take a loan against what you have if needed. You can always roll it over into a IRA. You will always pay a penalty if you withdraw before 59 1/2 years of age.
Exactly. This kid has no idea what he’s talking about.
This has been the dumbest rumor that's been around for a long time. It's your money. The city has no access or rights to it. The reason you can't take it out while you're working is because it's similar to a 401k for people in the private sector. There are set rules. Upon retirement, you have the option of leaving it or moving it elsewhere. If you leave it, you have full access to it. You can withdraw large amounts, small amounts or take monthly payments, all taxable. Don't listen to idiots who are clueless or trying to stir up shit.
You heard wrong. It’s your money even in a divorce your other half can not get any of it. Unlike your pension which they can get.
I’ve never understood why coppers go through the city for their retirement plans.
Even 20 years ago I saw the value in taking that money and investing elsewhere.
A “separation of powers” if you will, because I’ve never thought the city has our best interest at heart. Why do I want their hand in my cookie jar?
I’d rather invest individually on my own than through the city.
Relax, Nationwide is on your side.
Yes rolled mine out as well. Deferred comp is good for what it is while working. Brokerages firm many more investment options.
Maxed out in DC for 25 years- left with 1.4 mil. Stop the BS about it- it lowers your taxes and gives you an avenue to have a lot of money when you retire. Start small if you have to but , START putting into DC. You won’t regret it. The best thing about it is that you can make changes by just a click or a phone call. You’re totally in control of your money. Invest and don’t look back !!
You can take a loan and pay yourself interest anytime during your employment.
I retired and moved all my money out of deffered to a brokerage firm. The city may not be able to control your investment but it does get to use your deposited money like they are the bank and borrow against is by fractional lending as if its on thier balance sheet. So for every 1 dollar you have in they can borrow 10 dollars. So they borrow against your money as if it is thier asset. If the city goes bankrupt your money goes to pay thier borrowong before you. SO change out as soon as you retire to a red state run brokerage firm. Thats my understanding. (Could be wrong but that was my understanding even if it sounds fishy). It is a great way to save. Best way to go is the a Roth. You get hit with taxes now. But no taxes later
It’s short term paper.
Nationwide gives you 2.5% while they keep the other 2% they’re making off short term treasuries.
4 week treasuries have been yielding 4.3 to 5.25 for a few years now.
Why doesn’t the corrupt city of Chicago allow you to buy treasuries directly through Nationwide just like a brokerage like Schwab or Fidelity does and be able to keep all the interest yield?
How much did you pay in taxes on the 950k when you rolled deferred into an IRA? How long did it take to make that back?
Which is what I did when I retired.
Eh, although I agree with you, not entirely true. Anyone can look at your personal finances and give advice or ideas to try. Also, the city ABSOLUTELY is interested in any funds they can recover to offset any of their dumb spending. Will they? No, but the possibility isn't 0 as they can simply change a law if they were so inclined (hence the demise of pension system of them just forgetting to pay). It IS your money, but I believe depending on what you tossed it into, they might have restrictions that favor them first.
ABSOLUETLY agree, ANY type of retirement planning/investment trounces simply not doing it. Sure cash is king, but why work more OT when you can have your money work for you. Watch out for taxes! Consult a tax professional before you make any moves to avoid penalties!
My fire family did the same upon retirement. Every cent withdrawn a put elsewhere.
Great comment
You can take a loan out now and pay yourself back.
I told my kid to max out her deferred comp contribution from the very first day. Deferred comp wasn’t available until late in my law enforcement career so I have a lot less than I would’ve had. Don’t for get when you turn 50 they give you five years where you can “catch up” and increase your contributions. I have about 950,000 in my account; my wife, a teacher, has about $400,000. At my advanced age the IRS rules force me to withdrawal $18,000 a year. I suspect the Chicago plan is “directed” which means your contributions, unlike a IRA, can only be invested in approved funds. This a good thing for the sophisticated investor.
The approved funds in most plans are index funds (Vanguard), one of the safest equity ,investment you can make. Some people confuse these plans with IRAs where you can invest in most anything you want. Those are the funds you see advertised on internet promising big returns by investing in gold, etc.
My broker has advised me about my deferred comp for years.
If you think conehead will not try to take it, then you would be wrong.
Deferred is yours, not the City. Simple.
I for one dissolved my account with Deferred Compensation a few months ago. The city does have its hands in the pot of money. Don’t think otherwise. I moved all the funds to a private investment firm and it’s doing just fine under the circumstances. I would caution you readers to seek expert advice from your own investment person(s) to learn what would benefit you.
Stop scrolling and start reading. A 457b is a gift. It has huge advantages over an IRA or 401k. You can collect immediately after separating your employment even if you are younger than 59.5. You don’t even need to withdraw at that point because you can “borrow” up to $50k annually without paying tax (you pay the interest on the loan back to yourself). The costs are extremely low for our deferred comp and the Vanguard index funds have the lowest fees and are the best you can find. A government 457b must offer a fixed rate option, which is the Chicago fund. Other plans do not have to offer this option (also NEVER use it until you are at least 50 or even older). NEVER completely roll out of the 457b after retirement, or you lose the benefits the 457b offers. And the money is yours you fools. If you are young, never listen to the old fools on this job concerning money. People with money never talk about it. People who are poor love to share their ignorance.
The 457(b) is a federal level Internal Revenue Service retirement law deferring taxation, not a state or municipal law. Federal law Trumps local whims and laws. The city can't rewrite or ignore federal authority or face consequences.
But then the city and state elected "kings" and collaborators have ignored immigration law, embezzlement laws, wire fraud laws, racketeering laws, RICO corrupt democrat organization laws and conspiracy to commit an offense against the citizen of the Untied States. Your 457B is safe and city contributions to Nationwide typically lag behind, so don't listen to armchair investment critics who will get your panties in a bunch and raise your blood pressure.
Not Tru
Absolutely correct. I going to guess the ones that start rumors like this are the ones that did not invest. They only want others to make the same mistakes as they did.
Just one question, if the city went belly up would you get your money?
Wrong
When you have a deferred comp account working for a private company, your deferred comp account can be seized if the company declares bankruptcy. I discovered this when a bank I worked for was taken over by the FDIC in 2008. Everyone who had a deferred comp account lost their money to the bankruptcy court even though the company did not contribute a dime to those accounts. The Court even clawed back funds that people who left the company six months prior to the FDIC takeover had. Some of those people had cashed out their deferred comp accounts but were still required by the Court to pay back the money.
There is something in the legal language of deferred comp regs that obviously creates an ownership of those accounts by the employer or the Court would not have been able to seize those funds.
However, it hasn’t updated and now this appears?
This is could go down as a dumb comment.
Sorry, buy you don't have a clue.
I would look into that. I believe they changed that a couple of years ago. You can take a 50k “loan”. You pay interest but the interest goes back to you.
Someone told me….,who is someone and do you believe everything someone tells you?
A outside broker can review your deferred account with you and recommend changes. You then call deferred comp customer service and make those changes.
I did the same. Rolling your deferred comp into a IRA gives you/ your broker a wider choice of options of where to invest your cash. What ever works best for you
As soon as you can take the money & run. I did & have no regrets, there
is a world of difference outside of Chicago IL
Couldn't agree more & you can do it all on your own! You don't need anyone controlling it for you. Avoid the silly fixed & put it all in the market & keep it there.
Retired here. I wish I had put in more to deferred comp when I was newer on the job, but I did put in more than a little and less than a lot. Old timers did tell me to put in a much as I could afford but I put in slightly less than that.
Find a fund that averages more than 10 percent a year. Then, your money should double every 7 years. For you younger officers, I noticed that the first 12-15 years on, the money didn't seem to grow but then it did start growing noticeably.
It was “dropped”!
Absolutely not true. I’ve known people who withdrew for hardship. I withdrew for the purchase of a garage. It’s considered a “loan.” You then have to pay it back with interest over the course of loan (essentially paying yourself back.). They auto deduct from your pay.
If your money doesn’t exist how can you explain investing your money in the Fidelity Contra Fund, (or other funds) which have in the past, given an annual return of 30%, which is credited to your account and available for you to immediately withdraw with a phone call or electronically? The only real consideration you have is the income tax ramifications. Money can be withdrawn from your Nationwide Def. Comp. Account, but you will be taxed at the same penalty rate on the interest the account earned as you would if you took money out of an IRA. You should forget what that rep. told you 20 years ago at the firehouse as it was wrong.
Well said but do not leave out the part that if the city went into bankruptcy that the city’s creditors can come after city employees deferred compensation assets. We are in an employer sponsored plan so yes they are assets under the city. Happened in Orange County in 1995 they lost 10% of their deferred comp cash to debtors.
You do not have to be retired to move any and all money out of the Def Comp. You can do a Roll Over into T Row Price, Schwab, Vanguard, etc. The money becomes non taxable IRA. Don’t take possession of the money, you will get taxed by the IRS.
The money comes out of YOUR check and is not taxed until you withdraw from your deferred account. This isn’t city money and they don’t manage it. The city doesn’t pay you out in the end. This OP makes no sense. I log in everyday no problem to my account. They might want to investigate this person who they gave access to the account though.
Taking a loan against your deferred is a lot different than withdrawing or taking it.
I took mine out and bought a big piece of remote land with a new trailer on it.
How much did you pay in taxes on the 950k when you rolled deferred into an IRA? How long did it take to make that back?
Nothing is called a roll over IRA.
I am willing to bet in 6 months someone will post a comment just like this saying the city has all the deferred compensation money and can keep it. People need to learn what a 457b is
The person that started the comment is a fool and has no computer skills and no financial knowledge. Probably the guy that buys a new car every other year.
Yea this guy is a fool.
Dumb comment #2 today.
Ask again tomorrow and the answer will be the same.
https://www.youtube.com/watch?v=yegXwSRNPoY
Who is this douche in the 15th District???
Retied over 10 years ago. Should I close dc account and put it in a roth account? Who could do this for me?
Government 457b's are held in a trust and protected.
Non Government "top hat" are not.
You do not get penalized for withdrawing before 59 1/2. You can withdraw once you leave/retire from the job. That is one of the benefits.
I invest my $ in Chicago Public Schools; Great return.
I retired with over a million.
Someone knew what they're doing.
You believe what you want.
Has everyone forgotten about what they did to us with S.S. Laws, etc can be changed. Be careful what you believe will never change.
Hey $950k guy: it’s actually worth $741k max……. ( income taxes)
I’m rolling over to ROTH every year maxing out my tax bracket.
No RMDs
OMG. Deferred comp is your money. The city has nothing to do with it and can't touch it for any reason. There are so many goofs posting who haven't got a f--king clue. Unfortunately they listen to the garbage that people post and think it is the truth. Instead of listening to this dribble get off your ass and do your research and get the correct answers. So many of these comments deserve to be on the shit house wall.
It was explained to me in a similar fashion.
They defer paying you until retired.
So the city can hold off paying you (nation wide)
And all the while using some number metric to determine what they owe you upon retirement.
9:37.
I have over 1 million. 1.4 to be more precise. You sir don't have a clue.
The same douche that said this
However, it hasn’t updated and now this appears:
It's very different from a 401k.
But still a great thing to utilize.
Now that's funny.
Switch to Edward Jones They will do all the work for you
Is the money being transfers to the vendor held in trust? Are the deferred funds at the vendor held in trust? I have heard when orange county went under people lost deferred comp. money? Not sure if it's true?
I am not convinced nationwide is buying T-Bills with the money in “Chicago Blended Fixed”. My concern is that you’re just giving the money to the city and they are promising to pay you back. If you are “lending” the money to the city I would demand well over 2%. Probably more like 13%. Again just talking about Chicago Blended Fixed.
I'm going to guess the original poster has their account linked to an outside advisory company like Personal Capital or Empower. Sometimes, while using their platforms, Deferred Comp accounts don't link up immediately for viewing purposes. If they actually logged into The Deferred Compensation website, they'd see everything immediately. It's just a contest glitch..
It amazes me that with so much info available at your fingertips nowadays, and the many fellow POs that would be willing to explain finances to willing listeners, there are still so many dumb fuck POs that have no clue about their own finances. I learned years ago from an old timer, researched and asked questions. I made decisions based on what I wanted and where I wanted to be at retirement, others not so much. The end game is to retire with no debt, and a few hundred thousand in the bank. That starts with learning about your finances and the easy avenues to take for a good nest egg. I retired with well over 1 million in deferred, 2 house paid off and have a hard time figuring out how to spend what I have. No bragging rights here, just letting everyone know it can be done! Invest in yourself and your future and deferred is a good Avenue to take !!!
I agree.. You have to get forms to change administration or custodianship of your account from Nationwide to another entity. It was simple.
Well someone does and why not trust someone?
Talk to your broker but do not send the money to yourself (meaning have Nationwide send your money to the IRA or vehicle you are going to use).
if you believe the city can steal your deferred, that you should not invest in it. have fun in retirement living off of just your pension
To answer the the poster at 12:50. I didn’t mention an IRA (individual retirement fund). Our situation is unique; we have a child we will have to provide a lifetime income, so we just roll the mandatory withdrawals over to her trust account and pay the taxes out of our pensions.
My mandatory withdrawal is also higher than normal because I waited as long as I could, 71.5, before I started my withdrawals. I wanted the money to grow as much as I could.
Maybe not the best tax strategy. Our pensions and other income is high, we pay the standard tax rate. My wife taught for 40 years, I was a cop for 37 and the taught school until I was 70, meaning we draw pensions from SS, state teachers and police retirement.
Deferred Comp programs weren’t set up for people in our situation where we worked so long, and subsequently have high pension that we make more money (not counting the mandatory withdrawals) in retirement than we did working, so our tax rate didn’t change.
Def Comp anticipated that people would retire a t an earlier age, and their retirement income would be less than their pre-retirement income, so the distribution from def comp would bridge the gap.
So, my take away is if you can, retire as soon as possible with enough money to maintain your lifestyle.
Total toilet paper bullshit.
lol- yeah the RMD is a bitch !! Save save and save and end up paying the G at the end ! It gets real hard to keep your money when you accumulate it . I’m looking into that rmd issue now with 10 yrs to go and wondering how the fuck to not pay !! Sittin on a few mil and it’s going to hurt bad !!!!!
Ok, I'll ask again, what's going on w the drop program?
There's more than one type of deferred comp plans. Our cannot be attached by the city, or by bankruptcy court going after the city.
This is absolutely not true.
I heard this bs in the early 80’s. City was going to steal it. Ignored it and maxed out on deferred and am I glad
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