Frequently Asked Questions
Cash Match Plan

General

• What is the Virginia Cash Match Plan?
• Who’s eligible for the cash match?
• How do I enroll?
• Does the IRS treat the employer contributions as wages?
• Does this mean I don’t have to pay taxes on employer contributions on my behalf?
• What other benefits are there besides income tax deferral?
• Do I need to complete a separate enrollment form to get the match?
• What are the expenses associated with the Plan?

What is the Virginia Cash Match Plan?
The Virginia Cash Match Plan is a defined contribution plan established under Internal Revenue Code section 401(a) and Chapter Six of Title 51.1 of the Code of Virginia. Employers make contributions on behalf of eligible employees to individual participant accounts. Contributions accumulate on a tax-deferred basis until the plan amounts are distributed, after termination from employment with the employer that offers the Plan.

| back to top |

Who’s eligible for the cash match?
Full-time and part-time salaried state employees who participate in the Commonwealth of Virginia 457 Deferred Compensation Plan (457 Plan) are eligible for the Virginia Cash Match Plan as long as they are making continuous contributions of at least $10 per pay period to the 457 Plan. Salaried employees of political subdivisions, school divisions and special authorities that have adopted both the 457 Deferred Compensation Plan and the Virginia Cash Match Plan also are eligible if they contribute at least $10.00 per pay period to the 457 Plan. Wage employees are not eligible.

| back to top |

How do I enroll?

Enrollment in the Cash Match Plan is automatic for full-time or part-time salaried employees of the state and other employers that have adopted the Plan once they enroll in the 457 Plan and are making continuous contributions of at least $10 per pay date to the 457 Plan.

| back to top |

Does the IRS treat the employer contributions as wages?

No. The IRS does not treat the employer contributions as wages to the employee. No FICA tax is paid on Cash Match contributions. State and federal tax is not due until money is distributed from the Plan.

| back to top |

Does this mean I don’t have to pay taxes on employer contributions on my behalf?

As long as the money remains in the Cash Match Plan, you do not have to pay taxes on it. Under federal and Virginia law, your employer cash match contributions and earnings accumulate on a tax-deferred basis, allowing more of your money to potentially grow compared to after-tax alternatives. Once you begin taking distributions from the Plan, each payment you receive from your account is subject to federal and state income taxes as you receive it. Amounts remaining in your account are tax-deferred until they are withdrawn.

| back to top |

What other benefits are there besides income tax deferral?

Building retirement savings in the 457 Plan and Cash Match Plan means you'll have greater financial independence and you won't have to rely solely on your VRS retirement benefit and Social Security for retirement income.

By allowing incoming rollovers from many types of retirement plans the Cash Match Plan allows you to consolidate your retirement plans for easier management, lower fees and investment diversification.

| back to top |

Do I need to complete a separate enrollment form to get the match?

No. The 457 Deferred Compensation Plan Enrollment form enrolls you in both the 457 Plan and the Cash Match Plan, if you are eligible. As a 457 Plan participant, your employer will automatically pay the cash match into your account, if you qualify. You must complete a Cash Match Plan Beneficiary Designation Form or designate a beneficiary on the Plan website at www.varetire.org. Select the Cash Match Plan from the Defined Contribution Plans tab.

| back to top |

What are the expenses associated with Plan?

An annual record keeping and communication services fee of 19 basis points (0.19%), capped a combined account balance of $130,000, is deducted from your account on a quarterly basis (00.0475% per quarter). In addition, each investment option has investment management fees that vary, depending on the option. You can find the Plan’s core investment options’ fees and performance on the Plan Web site at www.varetire.org under the Defined Contribution Plans tab or by calling the Plan Information Line. You also can find this information within the Investment Option Performance report included with your quarterly statement. For more information on fees associated with each investment review the Fund Fact Sheets online or call the Plan Information Line at toll-free 1-VRS-DC-PLAN1 (1-877-327-5261).

| back to top |

Download the free Adobe Acrobat Reader to view .pdf files