Creating a plan of action for retirement is crucial for an employee’s future. Determining the best way to approach goals and implementing a plan that works is the priority. Taking the slow and steady approach can help employees accumulate for the long term, and by voluntarily contributing to a supplemental plan, employees can work towards achieving their goal one mile at a time.
Are you eligible to participate?
Employees are eligible to participate in the 403(b) plan upon hire. However, private contractors, trustees, illegal aliens, and/or student workers, are not eligible to participate in the 403(b) plan. Employees are fully vested in their contributions and earnings the minute they become participants in the plan.
Are you ready to take action?
Once a decision to participate in the employer’s 403(b) plan is made, employees should reach out to their payroll and benefits coordinator and begin their research on authorized investment provider(s) and their investment product(s). Choose an investment product(s) that is suitable to meet retirement goals and contact an investment provider representative (if applicable) to open an account. Employees may only choose from providers that are authorized under the employer’s plan.
How do you enroll?
Employees must contact an investment provider representative to open an account with their elected investment provider.
The two core vendors providing investment services to CSRIC members are:
Midwest Capital Advisors
Low-cost mutual fund platform
Website: https://midwestcap.com / Phone: 1-877-269-4032
GLP & Associates
Mutual fund platform with fixed interest options
Website: https://glpfinancialgroup.com / Phone: 1-877-457-9467
The total annual amount of employees’ contributions must not exceed the Maximum Allowable Contribution (MAC) calculation. The Internal Revenue Service regulations limit the amount participants may contribute annually to tax-advantaged retirement plans.
What are the benefits of 403(b) plans?
There are many benefits to contributing to 403(b) plans.
- Contributions Deposited into Individual Accounts – Employees own their account and make all decisions concerning the amount of their retirement savings contributions.
- Convenience of Payroll Contributions – Employers send each employee’s contributions to their selected provider company for deposit.
- High Annual Contribution Limits – Employees may contribute to their accounts up to limits established annually by the IRS.
- Flexible Contributions – Employees may change the amount of their contribution during the year as allowed by their employer.
- Benefits Paid to a Beneficiary at Death – All funds in an employee’s account are payable to a selected beneficiary upon death.
It is important to note that these accounts are designed for long-term accumulation. Employees should consult with their financial advisor or tax consultant to determine the potential advantages of a traditional 403(b) account.
How are traditional 403(b) account contributions made?
Contributions made to a traditional 403(b) account are pre-tax deductions from employees’ paychecks. Therefore, employees’ income tax is reduced for every payroll contribution that is made.
What are the provisions for 403(b) accounts?
Qualified retirement plans, such as 403(b), apply additional taxes on distributions prior to age 55 and separation from service or attainment of age 59½ .
How are Roth 403(b) contributions made?
Contributions made to a Roth account are after-tax deductions from employees’ paychecks and are subject to limit coordination with traditional accounts. Income taxes are not reduced by contributions made to a Roth account. All qualified distributions from Roth accounts are tax-free. Any earnings on deposits are not taxed as long as they remain in the account for five years from the date the first Roth contribution is made.
NOTE: Employees should speak with their financial advisor or determine how participation can help meet future financial goals.