What Is the Arkansas Diamond Deferred Compensation Plan?

The Arkansas Diamond Deferred Compensation Plan is a governmental 457(b) retirement savings plan that automatically enrolls full-time state employees hired or rehired on or after January 1, 2014, at a default contribution rate of three percent of annual compensation.¹ Voya Financial administers the plan, and participants can contribute on a pre-tax or Roth after-tax basis, choose from a lineup of investment funds, and take distributions on more flexible terms than most 401(k) plans allow.

Who Is Enrolled and How to Opt Out

The plan covers full-time state employees. If you work for a city, county, town, or other political subdivision, you’re excluded even if that entity has adopted the Diamond Plan.¹

Once you start (or restart) a state job, three percent of your annual compensation is automatically deducted and directed into the plan.¹ That rate is a starting point. You can move it up or down at any time.

If you’d rather not participate at all, you have 90 days from your first payroll deduction to opt out.² Opt out inside that window and the Director may refund the contributions already taken from your pay.¹ On your first day, you can hand the opt-out form to HR or payroll. After that, you’ll need to log in at the plan website or call 1-800-905-1833.

How Much You Can Contribute

For 2026, you can defer up to $24,500 of your compensation into the plan, combining any traditional and Roth contributions toward that single limit.³ Several catch-up rules let you save more as retirement approaches.

If you turn 50 or older during 2026, you can add another $8,000, bringing your total to $32,500.³
If you turn 60, 61, 62, or 63 during 2026, the catch-up rises to $11,250 instead of $8,000, for a total of $35,750.³
The special 457(b) three-year catch-up lets you defer up to $49,000, double the standard limit, if you’re within three years of the plan’s normal retirement age and didn’t max out contributions in earlier years. It’s unique to 457(b) plans and can’t be combined with the age-based catch-ups.⁴

The three-year catch-up only draws on unused deferral room from earlier years when you contributed less than the annual limit, so it works best if you spent time at the default three percent and want to make up ground before retirement.

Pre-Tax or Roth

You can direct contributions to a traditional pre-tax account, a Roth after-tax account, or split between the two.⁵

Traditional 457(b) contributions come out of your paycheck before taxes, lowering your taxable income now. Earnings grow tax-deferred, and you pay income tax when you withdraw.

Roth 457(b) contributions go in after tax, so there’s no upfront break. In exchange, both your contributions and their earnings come out tax-free in retirement if you’ve held the account at least five years and are 59½ or older, separated from service, or disabled.

Which one wins depends largely on whether you expect a higher or lower tax rate in retirement. Splitting the difference gives you two buckets to draw from later, whichever is more tax-efficient at the time.

Where Your Money Is Invested

If you don’t choose investments yourself, the plan puts your contributions into the BlackRock LifePath Index target-date fund closest to your projected retirement year.⁶ Target-date funds shift gradually from stocks toward bonds as you get closer to retiring, so the default is built to run on autopilot.

Beyond the default, the lineup includes index funds like the Vanguard Institutional Index and Vanguard Total Bond, fixed-rate options, money market funds, and equity funds spanning domestic value, growth, and international categories.⁷ Pre-built asset allocation models run from conservative to aggressive if you want a diversified mix without picking individual funds. Fund lineups change over time, so check the plan website for what’s current.

Getting Money Out

A major advantage of a governmental 457(b) is that distributions after you leave state employment are not subject to the 10% early withdrawal penalty that applies to 401(k) and IRA withdrawals taken before age 59½.⁸ One exception: if you rolled money into the Diamond Plan from a 401(k) or IRA, the portion tied to that rollover can still trigger the penalty if you withdraw it early.

When you separate from state service, your options for the balance include:⁵

Leave it in the plan and let it keep growing tax-deferred.
Take systematic installment payments on a schedule you choose.
Take a partial or full lump-sum distribution.
Roll the balance, in whole or in part, into another qualified plan or an IRA.⁹

All distributions are subject to federal and state income tax in the year you receive them, except qualified Roth withdrawals.⁵

Emergency Withdrawals While Still Working

While you’re still employed, in-service withdrawals are tightly restricted. Unlike a 401(k) hardship withdrawal, a 457(b) only allows one for what the IRS calls an “unforeseeable emergency,” meaning a severe financial hardship caused by events beyond your control. Qualifying situations include a serious illness or accident, loss of property from a casualty, imminent foreclosure or eviction, and funeral expenses.¹⁰ Buying a home or paying college tuition generally does not. The withdrawal is capped at the amount you need to cover the emergency, and you can’t repay it to the plan.

Required Minimum Distributions

You must begin required minimum distributions by April 1 of the year after the later of the year you turn 73 or the year you leave state employment.¹¹ If you keep working past 73, you can delay RMDs until you actually retire. Missing an RMD triggers steep IRS penalties, so mark the deadline if you’re getting close.

Naming Beneficiaries

You can name any person, trust, or organization as a primary or contingent beneficiary.⁹ If you name more than one, specify each person’s percentage. Otherwise the plan splits the balance equally. You can update your designation at any time by submitting a new form to the plan administrator.

Married participants have an extra step. If you name someone other than your spouse as beneficiary, your spouse must sign a written waiver acknowledging they won’t receive the benefit.⁹ The same waiver requirement applies if you name a trust. Keeping this designation current is one of the most common estate planning slip-ups with retirement accounts, especially after a divorce or remarriage.

Managing Your Account

Voya Financial is the plan’s recordkeeper and runs the online platform where you check your balance, change your contribution rate, adjust investments, and update beneficiaries.¹² The plan information line is 1-800-905-1833 for account changes, opt-out requests, or distribution paperwork.²

1
Justia Law. Arkansas Code 21-5-511 – Automatic Enrollment in Deferred Compensation Plan
2
Arkansas Department of Shared Administrative Services. Auto Enrollment Opt Out Form
3
Internal Revenue Service. 2026 Amounts Relating to Retirement Plans and IRAs, as Adjusted for Changes in Cost-of-Living
4
Office of the Law Revision Counsel. 26 US Code 457 – Deferred Compensation Plans of State and Local Governments and Tax-Exempt Organizations
5
Arkansas Department of Education. AR Diamond Plan Features
6
AR Auditor. Arkansas Diamond Deferred Compensation Plan Enrollment Form
7
Arkansas State Legislature. Arkansas Diamond Deferred Compensation Plan Investment Lineup
8
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
9
Arkansas Department of Education. Arkansas Diamond Deferred Compensation Plan Presentation
10
Internal Revenue Service. Retirement Plans FAQs Regarding Hardship Distributions
11
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
12
Arkansas State Legislature. Arkansas Diamond Deferred Compensation Plan