Planning for retirement is important because it allows individuals to secure their financial future and maintain their desired lifestyle after they stop working. By planning ahead, people can estimate their retirement expenses, set savings goals, and choose the most suitable retirement accounts or investment strategies to achieve those goals. Additionally, planning for retirement enables individuals to consider factors such as healthcare costs, inflation, and potential longevity, ensuring they have enough savings to cover their needs throughout retirement.
Beware of the potential shortfall in retirement income: Will your funds adequately cover increasing expenses? Even with pension coverage, many school district employees could experience a significant drop in income upon retirement. Relying solely on state pensions may not be sufficient to maintain your desired standard of living.
Take Control of your retirement by putting money into your 403(b) savings plan directly from your paycheck. This plan helps you save money with tax benefits, which you can add to your teacher retirement pension or another retirement plan. Your savings stay with you as you change jobs and can be moved to other plans or a traditional IRA if needed.
A 403B plan serves as a retirement savings option for employees of public schools, non-profits, and specific churches, separate from any pension provided by the employer. In a traditional 403B, contributions are tax-deferred, requiring taxes upon withdrawal, while in a Roth 403B, taxes are paid upfront, with tax-free growth thereafter.
A 457(b) plan is a type of retirement savings plan available to employees of state and local governments, as well as certain non-profit organizations. Similar to a 401(k) or 403(b) plan, it allows employees to contribute a portion of their salary to the plan on a pre-tax basis, meaning the contributions are deducted from their paycheck before taxes are applied. These contributions grow tax-deferred until withdrawal during retirement.
Contributions must be made through payroll. A salary reduction agreement is required and will inform your employer of your decision to participate. You can change the amount of your contributions by completing a new salary reduction agreement.
No. All 403(b) contributions must be made through payroll.
The IRS sets annual deferral limits on how much may be contributed. Special catch-up provisions may apply for participants over age 50 and for longevity of service with the same employer. A retirement specialist can assist you in calculating the Maximum Allowed Contribution.
If the 403(b) plan allows, loans are permitted to individuals. The plan sponsor must approve loans in advance. Loan limits apply and are aggregated with any other loans in 403(b) accounts within the plan and any loans from any other qualified retirement plan of the employer.
You can take distributions from the 403(b) plan at age 59½, if you are fully disabled, or at separation of service (10% IRS penalty may apply if withdrawn before age 59½. Regular income tax will be due on distributions.). Distributions due to financial hardship may be available. Please check with the Plan Administrator for eligible hardship distributions and be able to provide any supporting documentation of the hardship. All distributions must be approved by the plan administrator.
