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 Roth 457 Plan Account. As an Arizona state public employee, the State of Arizona Deferred Compensation Plan was created specifically for you.

Nationwide® has worked with public sector employees for more than 40 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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What are the plans?

The State of Arizona offers retirement plans for employees like you to put aside money from each paycheck toward retirement. These plans can help bridge the gap between what you have in your pension and Social Security, and how much you’ll need in retirement. The available plans include:

  • 457(b) Traditional Deferred Compensation Plan – tax-deferred, available to all State employees paid through the state.    
  • 457(b) Roth Deferred Compensation Plan — after-tax, available to all State employees who receive a check through the State.
  • 401(a) Deferred Compensation Plan – tax-deferred, and available to all fulltime, benefited State employees

All Plans

Check out the Plan Comparison Chart (PDF) to compare the plans.

These plans allow you to build a retirement savings account using automatic payroll deductions that go into investments you select from a wide variety of investment options you also have access to a Personal Retirement Consultant and Nationwide’s Retirement Specialists.

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!

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How Does it Work?

There are three steps to participating in a 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.

    Use the My Investment Planner to get a personalized retirement strategy, including recommendations for your retirement income goal, savings rate and portfolio asset mix. You’ll need to enroll first and then set up online access to use this tool.

  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!



Why Should I Participate?

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
$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
$711 $565.00 $14,690 $267,416 $805,421 $1,887,812
$731 $548.00 $19,000 $274,647 $827,200 $1,938,859
$750 $563.00 $19,500 $281,875 $848,968 $1,989,880

This table shows the cumulative value of 26 biweekly deferral amounts over 10, 20, and 30 years, assuming a compound annual rate of 7% and a 25% federal tax rate, for a single person with an annual salary of $38,000 and one deduction for federal tax purposes. Actual investment returns will vary from year to year, and the value of your account after the specified periods of years shown in the table may be less or more than the amounts shown. This illustration is hypothetical and is not intended to serve as a projection of the investment results of any specific investment. If fees and expenses were reflected, the returns would have been less.

Neither the company nor its representatives give legal or tax advice.  Please consult your attorney or tax advisor for answers to specific questions.


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.



What Are My Investment Options?

As a participant in the State of Arizona 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.

View fund performance 

Understand your options

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

  • Asset allocation
  • Stock fund
  • Bond funds
  • Short-term investments

There are five classes of stock funds we offer:

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

Get the help you need

Talk to a Retirement Specialist about your investment options.

View fund performance



Get Ready to Enroll

It only takes a few minutes to sign up. Here are some things you'll need:

Start Enrollment Now

Get paper enrollment form

Get the help you need

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


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