What is Deferred Compensation?
The Navajo Nation Deferred Compensation Plan is to provide termination, retirement and death benefits for elected members of the Navajo Nation.
Who is eligible to participate in the plan?
Participation in the Plan is determined by the Deferred Compensation Plan Administrative Board, is through being an elected member of the Navajo Nation Council, President and Vice President of the Navajo Nation, and Political Appointees (At-Will) employees.
How and Where do you enroll?
You are automatically enrolled in the Plan. All deferrals and any earnings thereafter become and remain Navajo Nation property, with understanding all amounts due will be paid upon loss of re-election, resignation, retirement, disability, termination or death. A benefit amount equal to 20% of your salary is deferred, monitored and invested conservatively by the Investment committee of the Navajo Nation.
Who administers the plan?
The Plan is governed by the guidelines of the Internal Revenue Code Section 457 and the laws of the Navajo Nation. The plan is administered by the Navajo Nation Individual participant accounts, maintained by the Plan Administrator and statements of account are furnished on a quarterly basis. All Plan expenses are born by the participants. The Deferred Compensation Plan Administrative Board is the final authority on all matters concerning the operation of the plan and by law; the Investment Committee has the right to supervise certain aspects of the Plan, including investment of assets.
When and how do you get your disbursement?
Your account may only be distributed in the event of loss of re-election, resignation, retirement, disability, termination or death. If, at the time of distribution, you have less than five years of service, you must take a lump sum payment. If you have five years or more of service, you may elect: 1) a lump sum payment; 2) a lump sum at a later date; 3) portion of lump sum payment and later by monthly installments until amount is exhausted or 4) same as option 3, except level monthly payments beginning at a later date as elected by the participant.
What are the Tax Consequences?
Deferred Compensation distributions are NOT qualified for rollover treatment and are NOT eligible for special five or ten year averaging. Your distributions are considered wages and are subject to federal income tax withholding. The withholding amount is based on information you provide on form W-4P and calculated using the percentage method of withholdings.
What happens to your disbursement if you die before distribution is complete?
At the time of death, beneficiary or family member should contact the Retirement office.