“Start putting money away for retirement, even if it’s a small amount. Retirement will be here before you know it.”
As a public employee, you have a unique opportunity to invest for your retirement through a 403(b) retirement plan, sometimes referred to as a tax-sheltered annuity (TSA). It’s similar to the 401(k) offered in the private sector.
Offered through your employer, 403(b) plans:
- Are salary deferral plans that allow you to contribute to your retirement through the convenience of payroll deduction.
- Offer you the opportunity to build up retirement savings and direct your savings investment to best meet your goals and personal situation.
- Accept contributions on a before-tax and/or after-tax (Roth ) basis. Please check with your employer to see what type of contributions are permitted.
The benefit of contributing to a 403(b)
A 403(b) investment allows you to fill any shortfall in your retirement income that may not be satisfied by your Wisconsin Retirement System (WRS) pension plan and Social Security benefit. Retirees are living longer and are more active in retirement and savings outside of traditional sources is becoming increasingly important.
Our 403(b) program has been nationally recognized by Forbes magazine and the Los Angeles Times as a low cost, soundly managed retirement savings option for Wisconsin public school employees.
What is a Roth 403(b)?
Roth contributions are after-tax, which means you pay taxes now on your contributions, but all qualified* withdrawals, including earnings, are tax-free.
This is different from 403(b) contributions that are made on a before-tax basis. Before-tax contributions reduce your taxable income and defer taxes until you withdraw the money.
So the question is, do you want to pay the taxes on your contributions now or when you retire?
*For qualified withdrawals from the Roth 403(b), the participant must be age 59½ or older and have had the account for at least five years.
Roth vs. Traditional 403(b)
- 403(b) contributions can be before-tax, or Roth (after-tax), or a combination of the two.
- Roth contributions are taxed now, but qualified withdrawals, including earnings, are tax-free. When you retire, you owe nothing on years of compounded earnings—which may be a significant amount.
- Before-tax (traditional) contributions reduce your taxable income and payment of the taxes is deferred until you withdraw the money. Withdrawals are taxed as ordinary income.
What is the benefit of after-tax savings?
One of the greatest benefits of Roth savings is the ability to reduce your tax liability in retirement.
For decades, the assumption has been that most people would be in a lower tax bracket in retirement and thus would benefit from before-tax savings. However, changes in tax policy, including lower tax rates, the taxation of Social Security, and other deductions available under the tax code, increase the chances that you could be in the same or higher tax bracket when you retire.
These changes mean that before-tax savings alone may not be the optimal tax strategy in every situation.
What does this mean to me?
In retirement, Wisconsin public school employees typically have at least three sources of income: the Wisconsin Retirement System, Social Security, and individual retirement savings. All are taxable as ordinary income in retirement. Any tax savings realized today could be more than offset by a higher tax bill in retirement.
How can I start making Roth 403(b) contributions?
WEA Member Benefits offers the Roth feature to its plan sponsors (employers). However, districts are not required to offer the Roth 403(b) feature in their plan, so check with your employer to see if they offer this feature. Current participants whose employer offers the Roth 403(b) need to complete a new Salary Reduction Agreement (SRA) and choose investment allocations for their Roth contributions. If you do not have a 403(b) account with Member Benefits, you will need to complete an enrollment application as well.
Can I move funds from another retirement plan into a 403(b) WEA Tax Sheltered Annuity (TSA) Trust account? If so, how?
The IRS allows you to move funds from several different types of retirement plans. However, the way these are handled is based on the type of retirement plan you have and your school district plan documents.
You can move your money in three different ways: exchange, transfer or rollover.
An exchange, if allowed by your school district plan, is defined as moving 403(b) (TSA) funds from one district vendor to a second district approved vendor while employed by the same school district.
A transfer, if allowed by both your current and former school district plan, is defined as moving 403(b) (TSA) funds from a previous employer 403(b) plan to your current employer 403(b) plan.
A rollover, is defined as moving funds from a different type of retirement account, such as an IRA, 401(k), or 457(b), to your current employer 403(b) plan. Furthermore, if you want to rollover funds from any other retirement plan, a distributable event must first take place. Examples of distributable events include, but are not limited to, separation from service or reaching age 59 ½. Check with us to see if rollovers are allowed into your employer’s plan.
It is also important to remember that a Roth 403(b) can only receive funds from another Roth 403(b) or Roth 401(k). It is recommended to call and speak with a WEA Member Benefits representative to discuss all rules and procedures.
- If you already have a 403(b) account with us, you can transfer money from another 403(b)or any other retirement plan if you meet the eligibility requirements outlined above. We’ll gladly send you any appropriate forms or you can download the forms.
- If you do not have an account with us, we can look at what you’re currently paying in fees, discuss your investments, and help you determine if a move is right for you. Remember, you can only establish a 403(b) account via an exchange or transfer from another 403(b) and/or contributions. You must enroll, either through over the phone enrollment, completing an online application, or calling and requesting an enrollment kit. Exchange, transfer, and/or rollover paperwork must be completed and mailed to us with all original signatures, along with a copy of a statement from the account you are looking to move. We will process your request and forward the information to your current provider, along with a letter of acceptance indicating we will accept the assets upon transfer. We will continue to communicate with your current provider until we receive your assets for investment. Very few providers will provide any information on status to anyone except the account holder, so we will gladly participate in a conference call with you and your current provider, if need be. We will also stay in touch with you throughout the process. Generally, this process takes four to six weeks.
Note: We recommend that you contact your current provider to review possible surrender charges and to inquire if they have special requirements or company-specific transfer/rollover forms you need to request from them. Even if your current provider has surrender charges, you may be able to minimize them by making transfer installments.
To request appropriate forms and/or enrollment kits, call us at 1-800-279-4030 or schedule a consultation at the website below.Schedule an exchange, transfer, or rollover (opens Calendly)
See our fees listed below and find out why fees matter and how they impact your current and future savings.
|Compare our fees with other providers||WEA TSA Trust|
|Annual administrative fee (capped annually at $500)||0.35%|
|Mortality and expense (M&E) fee||None|
|Fees to open, or close account||None|
|Inactive account* minimum annual fee||$25|
|Other administrative fees||None|
*Inactive accounts are accounts with no contributions within a calendar year.
Mutual fund management and redemption fees apply. See Investment Spectrum.
Because we are a member organization, our 403(b) program is designed with unique qualities that set us apart from other commercial providers.
One low annual administrative fee with an annual fee cap, keeps more of your money working for you.
- Low annual administrative fee of 0.35%. Annual fee cap of $500.
- No-load mutual funds
- No transfer fees
- No surrender penalties or withdrawal charges
*Minimum annual fee of $25 for inactive accounts. Inactive accounts are accounts with no contributions within a calendar year.
More about our 403(b) fees.
- We operate as a trust which reinvests any profits back into programs that benefit participants.
- We exclusively serve Wisconsin public education employees.
- No commissions are paid to Member Benefits staff.
- We have no shareholders.
No-load mutual funds, representing all asset classes, and our Prudential Guaranteed Investment provide the flexibility you need to manage risk and build a diversified portfolio.
See more about investment strategies.
Personal service and consultations
When you call us, you will talk to a live person. Our experienced consultants will take the time to help you develop a plan that is right for you. Schedule a personal phone consultation at a time convenient for you.
Access your account online at any time.
“There’s a combination of three things that set the frame work for achieving my financial goals: Knowing my options, knowing the cost and knowing myself and what I was comfortable with.”
Educator in Waukesha School District
“WEA Member Benefits provides good service, has low fees, and it’s dedicated to our profession. I feel good about the organization and I trust them.”