CA Savings Plus: 401(k) and 457(b) Contributions, Loans, and Withdrawals

California’s Savings Plus program is a voluntary retirement savings plan for state employees, offering a 401(k) and a 457(b) that sit on top of your CalPERS pension. It’s run by the California Department of Human Resources (CalHR) and administered by Nationwide.¹ The two plans have separate IRS contribution limits, so you can fund one or both. For 2026, the standard deferral limit is $24,500 per plan, which means a participant maxing both could set aside $49,000 before any catch-up provisions.²

Who Can Participate

Savings Plus is open to most State of California employees, including those in the California State University system, the Judicial Branch, and the Legislature.¹ Part-time, seasonal, and temporary employees who contribute to the PST Retirement Plan also qualify.³ Enrollment is voluntary and open year-round. There’s no waiting period and no open-enrollment window.

How the 401(k) and 457(b) Differ

Both plans let you save pre-tax or Roth dollars through payroll deduction. The practical difference is when you can touch the money without a penalty.

The 401(k) is a qualified retirement plan. In most cases you cannot withdraw funds until you leave state service or turn 59½. Take money out before 59½ and you’ll owe a 10% federal early withdrawal tax on top of ordinary income tax. One useful exception: if you separate from state service during or after the year you turn 55, the 10% penalty doesn’t apply to your 401(k) distributions.⁴ For state or local public safety employees, that break starts at age 50.

The 457(b) is an eligible deferred compensation plan for government employers. Its signature feature is that distributions after you leave state service escape the 10% early withdrawal penalty regardless of your age.⁵ If you expect to retire before 59½, that alone is a strong argument for funding the 457(b) first. One trap: money you roll from a 401(k) or other qualified plan into your 457(b) loses the penalty-free treatment. Distributions of those rolled-in dollars are subject to the 10% penalty if taken before 59½.⁶

You can contribute to one plan or both at the same time, and you can mix pre-tax and Roth within each.

2026 Contribution Limits

Because the IRS treats the 401(k) and 457(b) as separate deferral buckets, participating in both effectively doubles your tax-advantaged savings capacity.⁷ The 2026 figures:

Standard deferral limit: $24,500 per plan. Maxing both totals $49,000.²
Age 50+ catch-up: an additional $8,000 per plan, raising each plan’s cap to $32,500 and the combined ceiling to $65,000.²
SECURE 2.0 super catch-up for ages 60–63: $11,250 per plan instead of $8,000, pushing each plan’s ceiling to $35,750 and the combined total to $71,500.²
457(b) special three-year catch-up: during the three calendar years before your plan’s normal retirement age, you can contribute up to $49,000 to the 457(b) in a single year. The exact amount equals the standard limit plus any unused deferrals from prior years, capped at twice the annual limit. You cannot use this and the age 50+ catch-up in the same year for the 457(b).⁸⁹

The 457(b) special catch-up is easy to miss because it depends on how much deferral room you left on the table in earlier years. If you’re within three years of your plan’s normal retirement age and didn’t always max out, ask Savings Plus for an underutilized-limit calculation.

Pre-Tax or Roth

Pre-tax contributions lower your current taxable income, and you pay income tax when you withdraw the money later. Roth contributions go in after tax; qualified withdrawals, including the earnings, come out tax-free.¹⁰ You can split your contributions between the two in either plan. The usual question is whether you expect a higher tax rate now or in retirement — employees early in their careers often lean Roth; those near peak earnings often prefer the upfront break of pre-tax.

One rule to watch: for taxable years beginning after December 31, 2026, federal law requires employees who earned $150,000 or more in the prior year to make all catch-up contributions on a Roth basis.¹¹ This affects only catch-up amounts, not standard deferrals. Savings Plus may implement it earlier on a voluntary basis.

Enrolling

Enrollment happens online at savingsplusnow.com. You’ll need your Social Security number, gross income, and pay frequency.¹² During enrollment you choose your contribution rate, pre-tax or Roth treatment, and the split between the 401(k) and 457(b). Your plan sponsor pre-selects a default contribution rate and default investment, both of which you can change at any time. Contributions come out of your paycheck automatically, and you can raise, lower, or pause them through the portal whenever your situation changes.

Investment Options

The investment menu is organized by how hands-on you want to be. Core funds cover the main asset classes through a mix of actively managed and index options, with index funds generally carrying lower expense ratios. If you’d rather not pick an allocation, the State Street Target Retirement Fund series offers vintages from 2025 through 2070, plus a Target Retirement Income fund, each shifting from stocks toward bonds as the target date approaches.¹³ For experienced investors who want more choice, the Schwab Personal Choice Retirement Account (PCRA) is a self-directed brokerage window open to a wider set of mutual funds and individual securities.¹⁴ You must keep at least $2,500 or 50% of your total account balance (whichever is less) in the Savings Plus core funds per plan. Schwab doesn’t charge for the PCRA itself, but standard trading commissions apply and Savings Plus may assess its own maintenance fee.

Fees

Savings Plus charges a flat administrative fee of $6.00 per plan each quarter, so a participant in both plans pays $12.00 per quarter. There’s also an asset-based fee of 0.04% annualized on the first $600,000 of your account balance, capped at $60 per quarter. These are deducted from your account and are separate from the expense ratios inside the funds you choose.

Getting Money Out While Still Employed

Loans

You can borrow from your account for general purposes or to buy a primary residence. The maximum loan is the lesser of $50,000 or 50% of your vested balance. You’re allowed one outstanding loan per plan, so two if you participate in both. Each loan carries a $75 initiation fee, and the interest rate is based on the prime rate plus a percentage set by CalHR.¹⁵ You repay through payroll deduction, and the interest goes back into your own account. General-purpose loans typically run up to five years; primary-residence loans can run longer. If you leave state service with a balance outstanding and default, the unpaid amount is treated as a taxable distribution,¹⁶ and if the loan was from the 401(k) and you’re under 59½, the 10% early withdrawal penalty applies on top of income tax.

Hardship and Emergency Withdrawals

The two plans handle this differently. The 401(k) permits a hardship withdrawal for an immediate and heavy financial need, such as unreimbursed medical expenses, costs to purchase a primary residence, or postsecondary tuition and room and board.¹⁶ If you’re under 59½, the 10% early withdrawal penalty still applies.⁴

The 457(b) equivalent is an “unforeseeable emergency” withdrawal, limited to severe financial hardship from illness, accident, casualty loss, or other extraordinary events outside your control.⁵ The approval standard is tighter than a 401(k) hardship, but 457(b) emergency withdrawals carry no 10% early withdrawal penalty at any age.

Distributions After You Leave State Service

Once you separate, your balance becomes available. A lump-sum cash distribution is simplest and most expensive: the full amount is subject to ordinary income tax, and the plan withholds 20% for federal taxes at the time of distribution.¹⁶ Installment payments, either a fixed dollar amount or a fixed number of years, spread the tax across multiple years.

A direct rollover into a traditional IRA, Roth IRA, or another employer’s eligible retirement plan avoids immediate taxation and the 20% withholding.¹⁶ Rolling pre-tax money into a Roth IRA triggers a taxable event: you’ll owe income tax on the converted amount in that year.

The Roth Five-Year Rule

If you made Roth contributions, your original contributions always come out tax-free. The earnings on those contributions are tax-free only when two conditions are met: the distribution happens after you turn 59½ (or after death or disability), and at least five full tax years have passed since your first Roth contribution to that plan.¹⁰ The five-year clock starts on January 1 of the year of your first Roth contribution to the specific plan, not the actual date of the contribution.¹⁷ If you plan to retire in your mid-50s and tap Roth money, make sure you started Roth contributions at least five years before your target date.

Required Minimum Distributions

You can’t leave pre-tax money in your account indefinitely. Required minimum distributions must begin by April 1 of the year after you turn 73.¹⁸ If you’re still working for the state past 73, you can delay RMDs from Savings Plus until you actually retire; the required beginning date is April 1 following the later of the year you turn 73 or the year you separate from service.¹⁶ Under current law, the RMD age rises to 75 starting in 2033. Starting in 2024, designated Roth accounts in 401(k) and 457(b) plans are no longer subject to RMDs during the account owner’s lifetime, which is another point in favor of Roth contributions if you may not need the money early in retirement.

Beneficiary Designations

Your beneficiary designation on file with Savings Plus, not your will, controls who receives your account balance when you die.¹⁹ If you don’t name a beneficiary, the account goes through probate. Add or update beneficiaries through the online portal, and review them after any major life event like marriage, divorce, or the birth of a child.

A surviving spouse has the most flexibility, including the option to roll the account into their own retirement plan. Most other beneficiaries must empty the inherited account within 10 years of your death.²⁰ Exceptions to the 10-year rule exist for minor children, disabled or chronically ill individuals, and beneficiaries not more than 10 years younger than you.

1
California Department of Human Resources (CalHR). Savings Plus Program
2
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
3
California State University San Marcos (CSUSM). Savings Plus Program
4
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
5
Office of the Law Revision Counsel. 26 USC 457 – Deferred Compensation Plans of State and Local Governments and Tax-Exempt Organizations
6
Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
7
Internal Revenue Service. How Much Salary Can You Defer if You’re Eligible for More Than One Retirement Plan
8
Internal Revenue Service. Issue Snapshot – Section 457(b) Plan of Governmental and Tax-Exempt Employers – Catch-Up Contributions
9
Internal Revenue Service. Retirement Topics – 457(b) Contribution Limits
10
Internal Revenue Service. Retirement Plans FAQs on Designated Roth Accounts
11
Internal Revenue Service. Treasury, IRS Issue Final Regulations on New Roth Catch-Up Rule, Other SECURE 2.0 Act Provisions
12
Savings Plus. Get Ready to Enroll
13
Savings Plus. Fund Mapping
14
Savings Plus. Self-Directed Brokerage Account (SDBA)
15
CalHR: Savings Plus. State of California Savings Plus Program Thrift Plan
16
Internal Revenue Service. 401(k) Resource Guide – Plan Participants – General Distribution Rules
17
Office of the Law Revision Counsel. 26 USC 402A – Optional Treatment of Elective Deferrals as Roth Contributions
18
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
19
Savings Plus. The Importance of Designating Beneficiaries
20
Internal Revenue Service. Retirement Topics – Beneficiary