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Did you know you are eligible to save additional money for retirement in the District's 403(b) or 457(b) plan? Participation is voluntary and eligible employees can participate in one or both plans up to the current IRS maximums. All employees are eligible to contribute to the Districts 403(b) and 457(b) voluntary retirement plans. These plans allow employees to save additional funds for retirement on a tax-deferred basis.
What are the differences between 403(b) and 457(b) plans?
Although they are both funded with pre-tax contributions, the plans differ in many ways:
403(b) plans are "Qualified Retirement Plans" under the Internal Revenue Code. Once a participant contributes money to a 403(b) plan, he/she can access the funds but may incur an earley distribution penalty unless they are at least 59½ or age 55 and separated from service.
457(b) plans are considered to be "Eligible Plans" which allows a participant access to their funds at any age upon separation of service without an early withdrawal penalty.
403(b) Tax Sheltered Annuities (TSA's):
A tax-sheltered plan permits you to defer taxes voluntarily through salary reduction contributions. Though commonly referred to as Tax Sheltered Annuities (TSA's); investment options for public education employees included fixed and variable annuities, custodial mutual fund accounts as well as the Roth 403(b) which is an after-tax retirement savinds plan. A participant may not make direct contributions to individual stocks or bonds.
The complete list of 403(b) vendors is available on the CalSTRS website, Calstrs403bcomply.
457(b) Deferred Compensation:
A 457(b) is also a tax-sheltered plan that permits a participant to defer taxes voluntarily through salary reduction contributions. This option is commonly referred to as simply a "457" plan. The availabe investment options in this plan differe from those offered under a 403(b).
Approved vendors for 457 plans are:
- VALIC Financial Advisors - (800) 633-8960 or www.valic.com
- The TDS (Tax Deferred Services) Group - (866) 446-1072 or www.tdsgroup.org
- Plan Member Securities - (559) 738-9840 or www.planmember.com
- Voya - (800) 584-6001 or www.voyaretirementplans.com
The annual limit for elective deferrals to 403(b) and 457 plans for 2021 is unchanged at $19,500 ($19,500 for 2019). The amount may be higher depending on your age and years of service. Employees should consult with their financial advisor to determine if they are eligible to contribute more than the limit for 2021.
Important Announcement To All Employees Participating in the Public Agency Retirement System (PARS)!
Information about your particular PARS Participation account is now available in the Annual Participant Account Valuation Report and can be obtained by contacting Kyla Johnson email@example.com or at (559)-730-7534.
CalPERS offers a defined benefit plan where retirement benefits are based on a formula, rather than contributions and earnings to a savings plan. Retirement benefits are calculated based on a member's years of service credit, age at retirement, and final compensation (average salary for a defined period of employment).
CALPERS CONTRIBUTION RATES
2% @ 55 (Classic)
2% @ 62 (Pepra)
*Retirees cannot exceed 960 hours in a fiscal year (July 1 through June 30) for employment.
There are no exceptions to this limit.
CalSTRS provides retirement, disability and survivor benefits for full-time and part-time California public school educators through a hybrid retirement system consisting of its Defined Benefit, Defined Benefit Supplement and Cash Balance Benefit programs, and a voluntary defined contribution plan called CalSTRS Pension2.
CALSTRS CONTRIBUTION RATES
2% @ 60 (Classic)
2% @ 62 (Pepra)
*Retirees – Maximum Earnings for Fiscal Year 2020-2021 are $47,713
(up from $46,451 from FY2019-2020)