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MISSOULA COUNTY PUBLIC SCHOOLS 403(b) / 457(b) / Roth 403(b) RETIREMENT PLANS

 


As an employee of MCPS

You may have the opportunity to save for your future in a 403(b) or 457(b) tax-deferred retirement savings program or you may elect to save through a Roth 403(b) program which is an after-tax retirement savings program.  These plans are optional retirement plans to assist you in meeting your retirement goals.  Contributions are made solely via employee payroll contribution withholding.  Employer contributions or matching funds are not available.

 

Am I eligible to participate?

All employees are eligible to participate, no exclusions.

 

Why Contribution to a 403(b), 457(b), or Roth 403(b) plan?

Participating in your plan can provide a number of benefits, including the following:

Ø  Lower taxes – With a 403(b) or 457(b) you contribute before income taxes are withheld, which means you’re currently taxed on a smaller amount.  This can reduce your current income tax bill.

Ø  Tax-deferred growth and compounding interest – Your interest and earnings accrue tax deferred under a 403(b) or 457(b) plan.  Than means interest on your interest also grows tax deferred.  The compounding interest can allow your account to grow more quickly than saving in a taxable account where interest and earnings are generally taxed each year.

Ø  You take the initiative – Contribution to a 403(b), 457(b) or Roth 403(b) retirement plan can help you take control of your future.  Other sources of retirement income, including state pension plans and, if application, Social Security, rarely replace a person’s final salary upon retirement.  That’s why it’s up to you to make sure you’ll have enough money for retirement.

 

What is a 403(b) plan?

A 403(b) plan is a tax-deferred plan available to employees of public educational institutions and certain tax-exempt organizations.  A 403(b) plan allows you to make pretax contributions by convenient payroll reduction and save the money for your retirement.

 

403(b) plans were created to encourage long-term savings, distributions generally are available only when you reach age 59½ or leave your job or upon death or disability.  However, distributions can also be available in the event of financial hardship.  Bear in mind that distributions before age 59½ might be subject to federal restrictions and a 10% federal tax penalty.

 

You must begin taking withdrawals by the latter of:  April 1 of the year following the calendar year in which you reach the age of 70½; OR April 1 of the year following the calendar year in which you retire.

 

What is a 457(b) plan?

A 457(b) plan is a tax-deferred compensation plan available to employees.  This plan is very similar to the 403(b) plan, but allows more flexibility.  Interest and earnings are deferred until withdrawal, usually at retirement.  The 457(b) plan allows a service-based catch-up contribution if you are within the last three taxable years ending in the year before normal retirement age and under-contributed in prior years (federal limits apply).  Tax-free loans enable you to borrow against a portion of your accumulated account value without permanently reducing your account balance.

 

Generally, your account contributions may be distributed at any of the following events:  attainment of age 70½; separation from service; your death or unforeseeable emergencies.

 

What is a Roth 403(b) plan?

A 403(b) Roth plan offers employees the option of having their current contributions taxed now instead of their withdrawals at retirement.  Advantages include:  Tax-free distributions provided certain requirements are met.  No income limits, unlike with a Roth IRA.  Contribution and catch-up limits higher than those of a Roth IRA.  Reduce taxable income during retirement, potentially helping reduce taxation of Social Security benefits under current law. 

 

Generally, a distribution can only be made upon attainment of age 59½, termination of employment, death, disability or retirement, and for loans or hardships.  Tax-free treatment applies only to qualified distributions.  Federal restrictions and tax penalties can apply

 

How do I contribute to a plan?

Your contributions to a tax sheltered retirement plan are made through payroll withholding, after you complete a salary reduction agreement to either initiate your contribution or change the amount.  

 

While payroll procedures will govern when the salary reduction agreement first applies to your paycheck, as a general rule you can change your contribution for any future payroll period.

 

How do I manage my account?

The District has contracted with VALIC Retirement Services Company to manage the disbursement of the employee tax sheltered compensation retirement plans in order to comply with Internal Revenue Services Code regulations. 

 

You may access your information at www.myretirementmanager.com.  This link to Retirement Manager requires a user login ID and password.  The login is your employee identification number (found on your paycheck) and you set up the password.  The online service allows employees to select from the Disbursement Menu a certificate option for their disbursement request.  Use the Retirement Manager to pre-qualify for the following transactions:

Ø  Loan

Ø  Hardship or Unforeseen Emergency Withdrawal

Ø  In-Service Exchange

Ø  Severance from Employment Distribution

 

In the Spring of 2008, MCPS went through an Request for Proposal process to select vendors to provide this optional retirement benefit to our employees.  Attached is a list of local representatives who represent the selected vendors.  Please feel free to contact any of these representatives to discuss your retirement plan options.

 

If you require additional assistance, contact the Business Office at 728-2400, ext. 3021

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