403(b) and 457(b) Plans

Transcription

1 Supplemental Retirement Plans 403(b) and 457(b) Plans Extra savings vehicles for retirement 1

2 Supplemental Retirement Plans 403(b) & 457(b) Provide tax-deferred savings and allows you put away more for retirement beyond your basic retirement plan (OPERS/STRS or Alternative Retirement Plan). Supplemental Retirement Plans are offered to certain employees: 403(b) Non-Profit organizations 457(b) State and local government employees All WSU employees are eligible to participate in a 403(b) and/or 457(b)

3 Why Contribute? 1. Lower Taxes Today - Pre-tax deduction which reduces your taxable income today. 2. Tax-Deferred Growth - Your interest and earnings grows tax deferred. 3. Enhanced Retirement - Sources of retirement income OPERS/STRS or Alternative Retirement Plan (ARP) Social Security (if applicable) Above sources often do not replace a person's salary upon retirement. A 403(b) and/or 457(b) plan can provide a healthy supplement to your retirement income. 4. Contribution Flexibility - You can enroll, stop or change your contribution amount at anytime prior to the payroll deadline for the 403(b) and 457(b). 5. Tax-Defer Sick and Vacation Payouts (if eligible) - At separation of employment, reduce the amount of taxes withheld from your final pay by contributing all or a portion of your payout to a 403(b) and/or 457(b) up to the IRS limit. Your must contact HR to make this election.

4 403(b) & 457(b) Similarities Employee Type 403(b) For employees of non profit organizations such as schools, hospitals etc. 457(b) State and local government employees 2015 IRS Limits $18,000 $18,000 Catch Up Contribution (Age 50 and older) Contribution Coordination Under Age and Older 403(b) $18,000 $24, (b) $18,000 $24,000 Total $36,000 $48,000 $6,000 $6,000 There is no coordination between 403(b) and 457(b) plans. Employees can contribute the maximum to both There is no coordination between 403(b) and 457(b) plans. Employees can contribute the maximum to both Taxes Amounts are taxed when distributed Amounts are taxed when distributed Required Minimum Distributions Yes, age 70 ½ Yes, age 70 ½

5 403(b) & 457(b) Differences Loans Hardship Withdrawal or Unforeseeable Emergency Definitions 403(b) Yes. Loans are permitted under the plan to the extent permitted by the provider Hardship Withdrawal Unreimbursed medical expenses Expenses to prevent foreclosure or eviction of primary residence Funeral expenses for spouse, dependent or parent Expenses to obtain medical services Cost of a principal residence Tuition, room and board for employee or dependent 457(b) No Unforeseeable Emergency Unreimbursed medical expenses Expenses to prevent foreclosure or eviction of primary residence Funeral expenses for spouse, dependent or parent Illness or accident Loss of property due to casualty Unforeseeable circumstances arising as a result of events beyond the control of the participant Triggering Events to Access Account Earliest to occur of: separation from employment, age 59½, retirement, disability or death Separation from employment, retirement or death Early Withdrawal Penalty Yes. 10% before age 59 ½ No

6 WSU Providers 403(b) and 457(b) Approved Providers 403(b) 457(b) Approved Providers 403(b) 457(b) Ameriprise Financial Services, INC MetLife Resources, INC AA Advisors, LLC Ohio Deferred Compensation Fidelity Investments Oppenheimer Funds FTJ Fund Choice Putnam Investments Great American Life Insurance Company General Pension Planning TIAA-Cref VALIC Voya Insurance and Annuity Company (Formerly ING)

7 Getting Started 1 st STEP 1. Establish your 403(b) and/or 457(b) account with an approved provider. Regardless if same vendor or not, a separate account needs to be established for all 403(b) and 457(b) accounts in addition to an ARP account, if applicable.

8 Getting Started 2. Log onto our Retirement Manager website 3. Create a User Profile to establish a User ID and password.

9 Start or Change Employee Contributions 4. Select Start or Change Employee Contributions.

10 Start or Change Employee Contributions 5. Select your retirement plan type: 403(b)/457(b).

11 Start or Change Employee Contributions 6. Select pay date. REMINDER: Contribution elections must be made in Retirement Manager by the appropriate payroll deadline. Payroll Deadlines can be found on the payroll website Monthly Bi-weekly

12 Payroll Deadlines for Contribution Changes Retirement Manager Contribution elections must be made in Retirement Manager by the appropriate payroll deadline. 403(b) and 457(b) do not share the same payroll deadline for Retirement Manager. Monthly Payroll Pay Period Deadline for 403(b) Contributions in Retirement Manager Deadline for 457(b) Contributions in Retirement Manager Pay Date March 1-31, /13/2015 2/28/2015 3/31/2015 April 1-30, /14/2015 3/31/2015 4/20/2015 Bi-Weekly Payroll Pay Period Deadline for 403(b) Contributions in Retirement Manager Deadline for 457(b) Contributions in Retirement Manager Pay Date March 14-27, /20/2015 2/28/2015 4/3/2015 March 28-April 10, /3/2015 3/31/2015 4/17/2015

13 Start or Change Contribution 7. Enter your contribution amount.

14 Start or Change Employee Contributions 8. Review your contribution changes. 9. Confirm 10. Submit

15 Questions? 15