Regulations and proposed legislation
Very often tax legislation affects retirement plans. The 403(b) regulations and the advent of Roth 403(b) accounts, automatic enrollment programs and in-plan conversions are examples of how legislative changes can impact retirement plans.
We will provide consultative services for employers regarding issues that may impact how you provide retirement plans to your employees. To discuss current or proposed legislation or to schedule a consultant visit to your district, contact:
Kelly Behnke, 1-800-279-4030, ext. 6636
Jay Lukas, 1-800-279-4030, ext. 2361
Kellie Jo Roesslein, 1-800-279-4030, ext. 2032
Kristian Lee, 1-800-279-4030, ext. 4416
More and more employers take advantage of post-employment contributions to pay employee stipends or retiree benefits. These nonelective contributions may be made to the employee’s 403(b) account for up to five years following the year of retirement.
The benefit—neither the employer nor employee is subject to FICA taxes, an immediate 7.65% savings for both.
We are happy to speak with administrative personnel about this arrangement, address employees about the various benefits of post-employment contributions, and/or assist them with enrollment to accommodate these contributions.
Prior to January 2006, participants in a 403(b) plan could only make traditional elective contributions with pre-tax dollars—not subject to income taxes when made. Taxes on the accumulations are deferred until the money is withdrawn from the account, at which time the withdrawn amount is subject to income taxes. Roth contributions in a 403(b) plan are elective contributions made after income taxes are withheld. The interest and earnings withdrawn from a Roth 403(b) account are tax-free if the distribution is considered qualified.
The Roth 403(b) option is an added benefit for staff and there is no cost to the district for offering this option.
Automatic enrollment in 403(b) plans
Many workers are looking for an easier way to get started in their employer’s retirement plan. An abundance of investment choices and paperwork can be overwhelming barriers that may prevent participation in an offered retirement plan. Automatic enrollment makes it easy for employees to start saving for their future immediately by avoiding some of the complex decision making that sometimes hinders them from taking action.