Why save with an IRA?

Many Wisconsin public school employees use personal savings from a 403(b) to supplement what they plan to receive from the Wisconsin Retirement System when they retire. Why? Because most people will need more than Social Security and their pension in retirement. Adding an IRA to your personal savings portfolio adds flexibility and may help you better meet your retirement goals.

Types of IRAs

Traditional IRA contributions may be tax deductible and the earnings are tax-deferred while accumulating in the account; however, contributions and earnings are taxable when distributed.1

Roth contributions are after-tax, which means you pay taxes now on your contributions, but all qualified withdrawals, including earnings, are tax-free.2

If you think your tax rates will go down in the future, a traditional IRA might make sense. The Roth may be a better choice if you think your tax rate will go up in the future, especially if you are early in your career. And regardless of tax rate changes, you’ll still enjoy a 0% tax rate on qualified withdrawals from a Roth IRA.

Why invest in an IRA?

If you have an employer match in your 403(b), you should contribute enough to receive the maximum employer match. Once you’re hitting the match, you may want to diversify with an IRA, which may offer additional fund options.

If your employer doesn’t offer a Roth 403(b), a Roth IRA can help you plan for a mix of pre- and post-tax dollars in retirement.

In 2024, you can save up to $7,000 in total annual contributions ($8,000 for age 50 and over). However, you can contribute a smaller amount of your choosing. Automating your contributions makes it easy to contribute.

Why save with Member Benefits?

Open an IRA account

weabenefits.com/enroll

One low annual administrative fee (0.45%) up to an annual fee cap4 ($600 for WEAC members or $750 for non-members).

1 Consult with a tax advisor to determine the extent of your ability to deduct your contributions.
2 For qualified Roth IRA withdrawals, the participant must be age 59½ or older and have held the Roth IRA account for at least five tax years.
3 To be eligible for this program, you must meet the IRS eligibility requirements for contributing to an IRA. Restrictions may apply. Certain state residency required. Visit weabenefits.com/ira for details.
4 An annual minimum account cost of $25 applies to all accounts. The minimum is waived for all accounts with active contributions. Mutual fund management and redemption fees may apply.

Quick tips for building your retirement confidence

The Employee Benefit Research Institute’s 2023 Retirement Confidence Survey finds just under two-thirds of American workers (64 percent) feel confident in their ability to have enough money to live comfortably throughout their retirement—a decrease from previous surveys. We have some tips to help you feel more confident that you’re doing all you can to pursue your financial goals.

Don’t set it and forget it

The amount you need to save, how much you can plan on from Social Security, etc., are based on estimated numbers that will change over time. Revisit your financial goals and assumptions at least once a year or when major life changes happen so you can make adjustments to your savings strategy.

Think smaller

Instead of looking at your retirement goal as one big number, try looking at your anticipated monthly income need. This will make it easier to view along with your monthly expected Wisconsin Retirement System pension and Social Security estimate. It can help make your planning process more manageable, realistic, and less daunting.

Take the match and stretch to the limit

If your district employer offers a match in their 403(b) program, be sure to take it—it’s free money. And if you can max out your contributions, do it. You may even be permitted extra catch-up contributions once your turn 50. Learn more about contribution limits.

Use free tools and resources

Member Benefits offers a plethora of financial information and tools to help you plan ahead. Visit our learning center to access articles, calculators, eBooks, and much more.

Prioritize your future

Life will throw financial challenges at you, but it will likely also throw you some opportunities. When you get a raise, pay off a debt, or get a tax refund, that may be a good time to put extra savings into your retirement.

Time to review 403(b) and IRA contribution limits

Contribution limits for both the 403(b) and the IRA have increased in 2024. The contribution limit for the 403(b) is $23,000. The limit on annual contributions to an IRA is $7,000.

If you’re not maximizing your contributions, you may wish to re-evaluate the amount you’re putting toward retirement. Not only do you lower your taxable income, you ensure that you’re doing everything you can to reach your retirement goals.

If maxing out contributions is not realistic for you right now, remember: With compound interest, even a small amount invested today can grow to a large sum by retirement.

Elective 403(b) Contribution Limits

Calendar yearSalary Reduction Contribution Limit15 Years of Service Catch-UpAge 50 and Over Catch-UpPossible maximum
2024$23,000$3,000$7,500$33,500
2023$22,500 $3,000$7,500$33,000

IRA (Roth and Traditional) Contribution Limits

Calendar yearUnder age 50Age 50 or older
2024$7,000$8,000
2023$6,500$7,500

NOTE: Because the maximum Roth IRA contribution may be reduced depending on MAGI (Modified Adjusted Gross Income), some high-income taxpayers may not be able to make Roth IRA contributions; however, they could make Traditional IRA contributions.

yourINCOME PATH

yourINCOME PATH™ is the suite of options Member Benefits offers to help you turn your retirement savings account balance into income during retirement.

What can yourINCOME PATH help me with?

Examples include:

How much does it cost?

There are no additional costs for these services.* You have the power to start, stop, or adjust your income at any time. There are no sales costs or hidden fees associated with any of our investment options.

Visit yourINCOME PATH to explore what resources are available for YOU!

*If you choose to invest in the WEA Tax Sheltered Annuity or WEA Member Benefits IRA program, fees will apply. Consider all expenses before investing.

3 things you may not know about an IRA

In 2023, the annual contribution limit for an IRA is $6,500. In 2024, the limit on annual contributions to an IRA will increase from $6,500 to $7,000.

A nonworking spouse can open and contribute to an IRA

If one spouse is working and the couple files a joint federal income tax return, the nonworking spouse can open and contribute to their own traditional or Roth IRA. A nonworking spouse can contribute as much to a spousal IRA as the wage earner in the family.

Self-employed or have a side hustle? Save with a SEP IRA

If you are self-employed, you can open a Simplified Employee Pension plan—more commonly known as a SEP IRA.

Even if you have a full-time job and earn money freelancing or running a small business on the side, you could take advantage of the potential tax benefits of a SEP IRA. The SEP IRA has a much higher contribution limit than a traditional IRA. The amount you can put in varies based on your earned income.

Traditional IRAs require you to take required minimum distributions—Roths don’t

Traditional IRAs require you to take taxable required minimum distributions (RMDs) at a certain age—Roth IRAs don’t. You’ll need to withdraw the minimum amount in a traditional IRA by the deadline or you’ll be subject to a 50% tax penalty.

Since Roth IRAs aren’t subject to RMDs, you can leave the money in your account for potential growth, or withdraw it without increasing your taxable income.

For more information on the WEA Member Benefits IRA, call us at 1-800-279-4030.

SECURE 2.0 changes age for required minimum distributions

As of January 1, 2023,the Internal Revenue Service requires you to start withdrawing money from your before-tax and Roth 403(b) account at the later of age 73 or the calendar year you retire from an employer through which you contributed. These withdrawals are called required minimum distributions (RMD). Your minimum distribution is a function of your account balance and your life expectancy.

Are there any ways to eliminate the need for an RMD in my 403(b)?

Under prior law, a Roth IRA account owner did not have to take lifetime RMDs, but no such exception existed for Roth monies under 403(b) and other employer-sponsored retirement plans. SECURE 2.0 ends lifetime RMDs for Roth designated accounts in employer sponsored plans effective for taxable years beginning January 1, 2024. However, for retirees who attain age 73 in 2023, RMDs on Roth 403(b) monies must still be made by April 1, 2024.

What about my IRA?

Traditional and SEP IRA accounts also require RMDs to start at age 73. However, unlike the 403(b), you cannot delay the RMD past age 73, even if you continue to work.

What if I don’t take my RMD?

If you miss taking your RMD, the penalty is 25%, but if corrected during the two-year correction window, it is further reduced to 10%.

How does Member Benefits help?

If you have an account with us, Member Benefits will send you an RMD notice at the appropriate time and can assist you in setting up your RMD schedule. We continue to send RMD notices on an annual basis.

Moved to a new school district this fall?

Moving to a new district requires you to open a new 403(b) account in order to contribute to your retirement savings. We can help you enroll in your new plan and assist with consolidating your accounts (if allowed by the plan).

Schedule a meeting here or all us at 1-800-279-4030.

Long-term investing in a time of instability

The sharp rise in interest rates led to a decline in the value of Silicon Valley Bank’s mortgage bonds and Treasuries. The bank’s business was concentrated in the tech industry and many of their depositors had large uninsured balances (over the $250,000 FDIC insurance limit) at the bank. When technology start-up funding began to dwindle, customers’ withdrawals increased, forcing the bank to sell investments at a loss.

When news of this loss broke, panicked customers rushed to pull out their money and the bank was not able to meet demands. Days later, Signature Bank was ordered to close to avert a bigger crisis after it faced an influx of withdrawals following the Silicon Valley Bank failure.

We understand that some of you may have some concerns or questions about the safety of our Guaranteed Stable Investment fund after what has happened in the banking world. Here are some answers to that question.

Banks: Short-term savings

Bank deposits are intended for short-term liquidity and not for long-term investment. Generally speaking, making a short-term investment means you plan to access your money in three years or less. FDIC-insured banks cover up to $250,000 per depositor, per insured bank, for each account ownership category. Bank deposits over this amount are at risk when a bank fails.

Guaranteed Stable Investment: Long-term savings

The Guaranteed Stable Investment (GSI) is intended as a long-term investment, not a short-term savings account. However, it offers benefits from both worlds by providing a long-term investment opportunity with some built-in stability and protections. The principal and accumulated interest of your GSI are fully guaranteed by Empower Annuity and Insurance Company (EAIC) with no limit.

EAIC strength and stability

The GSI fund is backed by EAIC. As of December 31, 2022, EAIC has $27.7 billion of total net assets, and is rated AA-/Aa3/AA- (the second highest of nine categories) by S&P, Moody’s, and Fitch rating agencies, respectively.

These ratings are subject to change and represent the opinions of the rating agencies regarding the financial strength of EAIC and its ability to meet ongoing obligations to its policyholders.

Participant level protections

As discussed in prior communications over the years, the GSI has protections in place to prevent harm to the fund and its investors in the event of high withdrawals during certain economic conditions. Prudential (now Empower) introduced participant level protections (PLP) in 2018 to increase the safety of members who are in the fund. You can read our 2018 article, “Protecting a legacy: Participant level protections,” for more information about how the protections work and what they mean to you.

These protections exist to ensure the long-term health of the GSI and kick in to preserve the guarantee of the fund. They are considered to be state of the art in terms of 403(b) plan participant protections.

If you have any questions about the GSI fund, give us a call at 1-800-279-4030.

Create or change IRA contributions online

When you log in to your IRA retirement account through yourMONEY, you now have the option of starting or changing your contributions right in the portal.

You can choose between a one-time or a recurring contribution. A one-time contribution is a lump sum contribution, while a recurring contribution is a monthly scheduled contribution that is automatically pulled from your bank account on or around the 15th of each month.

It’s simple and straightforward to do:

  1. After logging into your yourMONEY portal, click on the Plans header.
  2. Hover your mouse over ‘Contributions’ and select either ‘One-Time Contribution’ or ‘Recurring Contribution.’
  3. Fill in the necessary information, including the name of your financial institution, routing number, and your account number.

You can modify or cancel your contribution choices at any time.

To learn more about managing your IRA contributions in yourMONEY, view a quick video, or call us with any questions at 1-800-279-4030.

What is the ‘lifetime income illustration’ in your 403(b) statement?

The illustration shows the “value” of your retirement plan account balance as if it were received in the form of an annuity (an insurance product that pays out a series of regular payments over your lifetime) and the monthly income you’d get from that annuity.

It is meant to be an educational tool for investors by presenting an estimated monthly income stream in addition to the usual lump sum on your statement. However, it is based on the end of the quarter snapshot and with the assumption that you would start taking distributions now.*

Keep in mind there are many other factors that go into planning for your retirement income—your Wisconsin Retirement System pension, Social Security, your savings, inflation, assumptions about future rate-of-return on your investments, and more.

While the rules only require this disclosure once per year, to simplify and standardize the process, the lifetime income illustration is provided in all of Member Benefits’ quarterly statements.

Let us help you plan for your retirement income

An income strategy is crucial to keep your money working for you in retirement, especially as you start to withdraw from your retirement account(s).

Member Benefits offers several income management options to fit your unique goals and needs during retirement through yourINCOME PATH, a suite of options and support to help turn your retirement savings account balance into income during retirement. This includes a range of flexible withdrawal options to meet cash flow needs, required minimum distribution support, qualified charitable distributions, Roth conversion strategies, and more. There are no additional costs for these services.

Learn more about yourINCOME PATH and use our free financial calculators as an additional resource.

*For illustrative purposes only as required by the new rule. This does not mean you must take your money out in the form of an annuity.