With pre-tax savings, you owe no income tax on any contributions or any earnings until you withdraw the money. This leads to the benefit of compounding – i.e. you generate returns on money that you would have paid in taxes if you did not defer those taxes. The Plan reinvests any earnings in your account, where they have the potential for continued growth because taxes are deferred within the account each year.

Roth is available to eligible local subdivisions that adopt it and to all state employees.

State employees may choose either Roth or pre-tax contributions, but not both. In the future, both election types will be available for employees to split their contributions between types.

You can contribute a maximum of 100% of includible compensation – not to exceed the tax code’s limit, a combination of before-tax and Roth contributions – of $23,000 in 2024. Eligible employees have a minimum contribution amount of 0.5% of includible compensation.

State employees receive a $15-per-paycheck matching contribution. Employees of counties, cities, towns or other political subdivisions may be eligible to receive a matching contribution. Please check with your plan sponsor.

If you will attain age 50 or older during the current calendar year, you may take advantage of the Age 50+ Catch-Up provision, which allows you to contribute more than the maximum limit. In 2024, this amount is $7,500 over the $23,000.

If you are within the three calendar years that end prior to the calendar year of your normal retirement age, you may be eligible to use the Special Catch-Up provision to contribute even more to your Hoosier START account. The Special Catch-up provision allows you to defer up to double the normal limit for up to three years.

The State of Indiana Hoosier START program is dedicated to transparency in fees and the cost of participation in the Plan. The Plan is funded almost entirely by participant paid fees.

Fees that participants pay currently come from three components:

1. A record-keeping fee of $12 per quarter is assessed for the record-keeping and administration of each established account. This fee is reflected on your quarterly statement. Newly enrolled participants receive a 6-month administrative fee waiver from their first contribution date.
2. An administrative expense fee of $1.50 per quarter is paid to Hoosier START for State administration of the plan. Newly enrolled participants receive a 6-month administrative expense fee waiver effective from their first contribution date.
3. Investment management fees are the cost of each individual investment option that you select within your Plan account. This fee is not a visible deduction directly from a Plan investment but rather is charged by the investment managers against the performance of the investment product. These fees are expressed as a percentage known as expense ratios are disclosed on your quarterly statement. Note: funds may also impose redemption fees and/or restrictions on certain transfers, redemptions or exchanges if assets are held for less than the period stated in the fund’s prospectus and other disclosure document. For more information, refer to the fund’s prospectus and/or disclosure documents.

Distribution withholdings will vary depending on the type of distribution you request. Generally, the mandatory 20% federal income tax withholding will apply to distributions unless you elect a direct rollover of the entire amount or take periodic payments that last more than 10 years. Currently, Indiana does not mandate state income tax withholding at the time of distribution. The Plan will withhold state income taxes upon request. A Form 1099-R for the distribution amount will be mailed to you by January 31 of the year(s) following the year(s) in which you receive a distribution.

Your Roth distribution is income tax free if you withdraw your Roth contributions and any earnings after holding the account for at least five tax years and meet one of the following:

• You are at least age 59½
• You have a disability
• Upon your death, after which your beneficiaries will take the withdrawal

If you or your beneficiary make a distribution without meeting the above qualifications, you will owe ordinary income tax on any earnings that are distributed.