A 415(m) plan is a “governmental excess benefit arrangement” that offers deferred compensation to higher-paid public employees when the employer’s mandatory retirement benefit would otherwise exceed the contributions limits of an underlying 401(a) or 403(b) retirement plan. It acts as a “spillover” plan for the excess contributions to restore benefits that would have otherwise been lost due to the limits.
A 415(m) plan is a valuable benefit that helps you build greater tax-advantaged retirement savings. Specific features and benefits may vary by plan.
- Automatic activation: The plan is only activated if your total calculated retirement benefit exceeds the IRS 415(c) limits for the year. Once contributions to the underlying plan hit the limit, any additional contributions are redirected to a 415(m) plan.
- Employer contributions: Typically, your employer funds this plan based on a mandatory employer benefit that pushes total contributions over the underlying retirement plan limits.
- Tax advantages: The excess benefits are pretax, with ordinary income tax due on the funds when withdrawn. Any growth of funds in the plan are also tax deferred.
- Choice and flexibility: In general, you’ll have the same menu of investment options that are available in your underlying 401(a) or 403(b) retirement plan so you can design a comprehensive investing strategy that’s right for you. A Corebridge financial professional can help you with your planning.*
- Support: You’ll have access to Corebridge’s wide variety of planning and learning resources to help you take action for your future. This includes one-on-one help from a Corebridge financial professional.
A 415(m) plan is typically not a supplemental contribution plan for excess employee contributions unless a mandatory employee contribution exceeds the contribution limit of the underlying plan. Always check the plan documents for the details of your plan. As a public employer plan, it is not subject to ERISA or any related IRS or DOL reporting requirements.
Benefits are still capped
- While a 415(m) plan allows for extra benefits above a retirement plan’s total contribution limits, benefits are still capped by what you’re entitled to under IRS annual compensation limits for benefit calculations (the IRS Section 401(a)(17) limit). For 2026 the compensation limit is $360,000.
- For example, if you earn $400,000 and have a mandatory employer contribution of 25%, your theoretical benefit would be $100,000. But since the benefit calculation is limited to $360,000 in compensation, your actual benefit would be $90,000.
- The 2026 contribution limit for retirement plans (including 401(a) and 403(b) plans) is $72,000. Using the same example as above, that means that your total 415(m) annual excess benefit for 2026 would be $18,000 (the $90,000 cap minus the $72,000 that would go into your underlying retirement plan first).
Assets are owned by your employer
- Savings are considered employer assets until distributed to you and are therefore not protected from creditors should the employer become insolvent.
Since the 415(m) plan is a nonqualified deferred compensation plan, the distribution options are generally limited. Distributions are handled in accordance with the provisions of the plan and generally coordinated with the underlying retirement plan.
Limited access to the funds avoids triggering immediate taxes
- 415(m) funds are subject to “constructive receipt” rules, which stipulate that if you have unrestricted legal access to the funds, you must pay income taxes on those funds immediately even if you have not withdrawn them.
- Therefore, to maintain tax deferral, distribution options are limited. For example, when contributions to your underlying plan hit the contribution limit, you do not have the option to take the excess benefit in cash. It must go directly into the 415(m) plan.
Distributions are typically allowed only in a few circumstances
- Separation from service (retirement or leaving the employer)
- Death
- Disability
- A fixed distribution date specified in the plan document
Most plans don’t allow in-service withdrawals the way a 401(a) or 403(b) plan might. Check the 415(m) plan documents for the specific details of your plan. Distributions are taxed as ordinary income.
Early withdrawal penalties generally don’t apply
- There is typically no 10% additional tax on distributions in any circumstance. However, this can depend on the exact structure of the plan, so check your plan for details.
Loans are not permitted
- 415(m) plans don’t allow loans.
Rollovers are not permitted
- Cannot be rolled into an IRA
- Cannot be rolled into another qualified retirement plan
- Must instead be paid directly to you and taxed