Your 403(b) Tax Sheltered Account Program

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Your 403(b) Tax Sheltered Account Program
Prepared for the Employees of Riverview
Intermediate Unit 6
2
What is a 403(b) Tax Sheltered Account (TSA)?

• TSAs are voluntary long-term retirement
  savings plans that allow all school employees to
  set aside money on a tax deferred basis for
  retirement.
• Section 403(b) of the IRS Code establishes and
  permits Tax Sheltered Accounts for all school
  employees.

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Why you should take advantage of a 403(b) TSA
program
Your Retirement

• Reduce current income taxes
• Provides tax-deferred growth
• Supplements other retirement income ?

403(b) PSERS Social Security Savings
Income taxes paid at time of withdrawal
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• How does a 403(b)
• Tax Sheltered Account (TSA) work?

100/pay in Bank 100/pay in TSA
2012 Taxable Income (Married filing jointly) 50,000 50,000
TSA 100/pay x 26 -2,600
Adjusted Gross Income 50,000 47,400
Income Tax 12,500 11,850 -650
Contributions of 2,600 per year could
accumulate to 37,214 after 10 years, with an
income tax savings of 6,500 Assuming a 25
Federal Tax bracket and a 7 fixed annual
interest rate
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Employee Deferral Limits in 2012
How much can I elect to contribute to my 403(b)?
2012
Normal Limit (or 100 of pay, if less) 17,000
Aged 50 Catch up 5,500
Maximum Employee Contribution 22,500
When can I get my money out of my TSA?

• No IRS penalty if age 55 and separated from
  service
• In-Service withdrawals permitted at age 59 ½

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Your 403(b) Plan permits

• Universal Availability (every employee can
  participate)
• Exchanges (between approved vendors)
• Transfers (from or to another school employer)
• Loans (if offered by the vendor)
• Hardship Distributions (if offered by the vendor)
• Roth 403(b) Contributions

And, our IU offers employees the ability to
contribute to a 457(b) Deferred Compensation Plan
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Roth 403(b)

• What?
• Section of IRS Code that allows participants to
  make after-tax contributions, receive tax
  deferred growth, and make after-tax withdrawals
  after retirement
• Benefits
• Allows you to have tax-free assets after
  retirement
• Allows a combination of tax-free and taxable
  contributions during retirement
• Could be useful for employees with more time to
  save

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457(b) Plan Deferred Compensation

• What?
• Section of IRS Code that allows participants to
  defer income until retirement, and shelter that
  income from current Federal Income Taxes
• Benefits
• Can be combined with a 403(b) to allow twice the
  amount of pre-tax savings per participant
• Ability to access the money prior to age 59 ½ if
  separated from service

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Combined Contribution Limits for 403(b) and 457
Plans for 2012
Account Type Basic Contribution Limit (Under age 50) Age 50 or Older Catch Up Total Annual Contribution Limit (Age 50 or above)
403(b)(7) or Roth 403(b)(7) Tax Sheltered Program 17,000 5,500 22,500
457(b) Program 17,000 5,500 22,500
Combined 403(b)(7), Roth 403(b)(7) 457(b) Total 34,000 11,000 45,000
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The Time is Now
The Benefit of 403(b) Contributions
TSA Contributions with 30 per pay, per year
Increase
Years 50 100 250 500
5 15,150 22,300 43,749 79,498
10 57,848 75,026 126,559 212,447
20 274,711 325,679 478,586 702,546
30 799,957 911,436 1,227,747 1,668,311

• Above Chart Assumes
• Contributions over 24 pays per year, 7 interest,
  and maximum 20,000 annual contribution
• Assumes eligibility for age 50 Catch-up
  contributions
• Illustrations are hypothetical and are not
  intended to serve as projections or prediction of
  performance for any specific investment

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Riverview Intermediate Unit 6
Riverview Intermediate Unit 6List of Approved
Investment Providers

• Ameriprise Financial
• Horace Mann Life Insurance Company
• Kades-Margolis Corporation
• MetLife Investors Insurance Company
• PA Administrative Services, Inc.
• Security Benefit
• Symetra Life Insurance Company

Complete contact information for all of the
representatives of the above approved investment
providers is included in the Summary Plan
Description, which can be found at
www.employeradmin.com
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Getting Started

• Go to www.employeradmin.com for more information
  about your 403(b) Plan
• Contact one of the investment provider
  representatives listed in the Summary Plan
  Description to open a TSA and/or 457 account
• Remove and complete the Salary Reduction
  Agreement in the Summary Plan Document or
  download a copy from the EAS website
  www.employeradmin.com
• Turn the Salary Reduction Agreement into the
  payroll office

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Your 403(b) Tax Sheltered Account Program

• Questions?

The information in this presentation is for
informational purposes only and should not be
construed or relied upon as tax advice or legal
advice.  It was not intended to be used, and
cannot be used, for the purpose of avoiding
penalties under the Internal Revenue Code or
promoting, marketing or recommending to another
party any transaction or matter presented. 
If this presentation is used in the offer or
sale of a variable annuity or mutual fund, it
must be preceded or accompanied by the
appropriate product prospectus. An investment in
a mutual fund or variable annuity involves risk,
including loss of principal, and is not a deposit
or obligation of, or guaranteed by any bank. The
investment return and principal value of an
investment in a mutual fund or variable annuity
will fluctuate so that you may have a gain or
loss at redemption. Securities and Registered
Investment Advisory Services Offered Through GWN
Securities, Inc. 11440 Jog Road Palm Beach
Gardens, FL 33418 [phone]Member FINRA
SIPC For more information and to carefully
consider the securities offered, including
investment objectives, risks, charges, expenses
and fees, please request a prospectus from you
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carefully before you invest or send money.