CFO Sink to State Employees: Maximize State Bonus by Investing in Deferred Comp
CONTACT: Tara Klimek or Brannon Jordan
TALLAHASSEE– Florida Chief Financial Officer Alex Sink today unveiled a new initiative that gives state employees a way to maximize their annual bonus by investing it in the State of Florida Deferred Compensation Plan. Administered by the Department of Financial Services, the Deferred Compensation plan is an individual tax-deferred retirement vehicle funded with employee contributions.
State employees choosing to participate will be able to invest as much as $897 in their own personal retirement account as opposed to receiving their bonus as a lump sum payment of approximately $673.
“As the state’s Chief Financial Officer, part of my job is to help promote smart financial moves for Floridians,” said CFO Sink, who runs the department. “By investing their bonus in a retirement account, state employees have the opportunity to put an additional $200 to work for them instead of the government.”
In the 2007 General Appropriations Act, the Legislature provided for $1,000 bonuses for all full-time state employees, to be paid November 7, 2007. Until this year, employees were forced to receive bonuses as lump-sum payments, subject to 20 percent federal taxes and Social Security and Medicare taxes. After all the taxes are deducted, most state employees will be left with a net check of only $673.
However, state employees taking advantage of the opportunity to invest their bonus will defer having to pay the 20 percent federal government tax and will receive as much as $897 to invest in a retirement account. Eligible state employees can invest all or part of their bonus and will receive information about this new initiative from the state’s deferred compensation program in early July.
The deferred compensation program allows state employees to delay, or "defer," receiving a portion of their income until a later date and was established by the state under section 457(b) of the Internal Revenue Code. Deferred compensation participants must notify the program of their choice by September 1, 2007. State employees who are not currently participants in the state’s deferred compensation plan will also have the ability to participate if they join the program by August 15, 2007. Participants are able to choose from six investment companies screened by the state to manage their assets. For more information about the state’s deferred compensation program, please visit www.myfloridadeferredcomp.com
As a statewide elected officer of the Florida Cabinet, Chief Financial Officer Alex Sink oversees the Department of Financial Services, a multi-division state agency responsible for management of state funds and unclaimed property, assisting consumers who request information and help related to financial services, and investigating financial fraud. CFO Sink also serves as the State Fire Marshal.