REGULAR 403(b), ROTH 403(b) DEFERRED COMP, 457(b)

WHAT IS A 403(b)? Retirement Savings Plans (403b/Roth 403b) are qualified savings accounts that are available only to employees of public school systems and certain other non-profit organizations. The legislation creating these tax-deferral plans originated in 1958 and specifically added public school employees as eligible participants in 1961. As a result, these plans became regulated by Section 403(b) of the Internal Revenue Code.

WHAT IS A ROTH 403(b)? Similar to the Roth IRA, the Roth 403(b) allows individuals to contribute after-tax dollars to an account that will grow tax-deferred. A withdrawal of contributions will not be taxed. Employees have the option of directing 403(b) contributions to a regular 403(b), a Roth 403(b), or some combination of the two plans. Contributions to both plans cannot exceed the year's total contribution limit for one plan.

The School District has approximately 8 active vendors that can provide access to these retirement savings accounts through payroll deduction.

Benefits of participation include:

• Immediate Income Tax Savings
• Pre-Tax Dollars Deposited into Individual Accounts
• Convenience of Payroll Contributions
• Generous Annual Contribution Limits
• Flexible Load Provisions
• Flexible Contributions
• Benefits Paid To Your Beneficiary at Death

You may choose from several types of 403(b) accounts for your retirement savings it is important to select the type of plan best suited to your needs and goals. All employees who are normally expected at least 20 hours per week are eligible to participate. This can include substitute teachers, cafeteria workers and extended day employees.

WHAT IS A DEFERRED COMPENSATION 457b PLAN? A Deferred Compensation 457b plan is another section of the tax code that offers retirement savings. Unique features of a 457b plan are that it offers catch-up provisions during the last three (3) years of employment and access to money upon separation of service. However, a 457b plan has different provisions than the 403(b) plan including who owns the funds, differences in contribution limits and on access to monies contributed under the plan. Employees should consult their authorized vendor and/or financial planner for advice on how this plan could work to their advantage.

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