Frequently Asked Questions (FAQ’s)
How do I start a voluntary retirement account?
An employee can go to their College HR office and fill out an application for the chosen carrier and fill out the appropriate Salary Reduction Agreement.
When can I start a voluntary retirement account?
An employee may start a voluntary contribution plan at any time during the year. If an employee wants to continue contributions year after year, a new salary reduction agreement is not needed. Employees are only required to fill out a new salary reduction agreement when changing the amount of the contribution.
How much do I contribute?
The amount can be anything that does not exceed the regulated limit for a certain year (see Supplemental Benefit Section.)
Example for 2003--- $500/paycheck = $12,000
Example for 2004--- $541.67/paycheck =$13,000
Note: 24 pay periods in one year.
Why would voluntarily contributing to a plan benefit me?
There are several reasons that contributing to a voluntary retirement plan could help you.
a) an employee can save more money to meet retirement goals/needs
b) this contribution is for a tax deferred plan, which means the contribution comes out pre-tax from your salary
c) it may help to reduce your current taxes or future taxes
What are the similarities/differences between a supplemental 403(b) and a 457(b)?
Similarities:
-tax deferred status, both are governed by Section 415 of the Internal Revenue Service
-both have catch-up provisions
-may contribute the maximum amount to both plans
-immediately vested
Differences:
-403(b) has a 15-year service rule for availability of catch-up amount
-457(b) has a catch-up amount of, the lesser of two times the normal limit (i.e.-$12,000 x 2) or the underutilized amount from previous years
-457(b) plan can allow the employee to start taking distributions, without tax penalties, upon separation (even if the employee is not of retirement age)
-457(b) plans allow rollovers to and from other qualified plans (check details)
Legal Information
THE INFORMATION AND CONTENT PROVIDED ON THIS WEBSITE IS GENERAL IN NATURE
AND FOR INFORMATIONAL PURPOSES ONLY. THE INFORMATION AND PRODUCTS MADE
AVAILABLE TO YOU ARE NOT INTENDED TO BE AND SHOULD NOT BE CONSTRUED AS:
i.) A RECOMMENDATION; ii.) LEGAL OR TAX ADVICE, or iii.) A LEGAL OPINION.
KCTCS DOES NOT PROVIDE LEGAL OR TAX ADVICE. YOU SHOULD CONTACT YOUR LEGAL
OR TAX ADVISOR REGARDING YOUR SPECIFIC TAX SITUATION PRIOR TO TAKING ANY
ACTION BASED UPON THIS INFORMATION.
|
