Municipal Employees

Section 457 of the Internal Revenue Code enables municipal employers to establish tax-sheltered retirement plans for their employees. Aside from nominal third-party administration fees there is no cost to the employer; and there is very little work involved on the employer's part other than establishing a payroll deduction mechanism, provided the program is managed by a firm knowledgeable in the plans of this type.

The most beneficial plan for the employees allows each to select from a broad range of investment products that are chosen by the employer. These investment options fall into two broad categories known as fixed products and variable products. Simply stated, fixed products usually guarantee the principal, and the interest (or rate of return) varies; variable products fluctuate in value according to market trends. Annuities offered by insurance companies are typical fixed investments.