Rockford Public Schools 403(b) Plan
Section 403(b) of the Internal Revenue Code regulates the Rockford Public Schools 403(b) Plan. A 403(b) retirement plan is similar to a 401(k) plan. Both plans allow participants to set aside additional money for retirement. However, the biggest difference between the two plans is that a 401(k) covers private-sector workers, and a 403(b) plan is designed for employees of public schools and certain tax-exempt organizations.
403(b) Plan in Brief
As a participant in the Rockford Public Schools 403(b) Plan, you have the option of contributing pre-tax money to the 403(b) plan.
Participation in this plan is strictly voluntary and does not reduce any of your other benefits based on full salary such as retirement, life insurance, disability or survivor benefits.
Allows you the opportunity to accumulate additional retirement funds, as a supplement to your Teacher's Retirement System (TRS) or Illinois Municipal Retirement Fund (IMRF) pension. Provides you with the ability to contribute a flat dollar amount, determined by you, which is deducted from your paycheck. The amount of income that can be contributed is subject to IRS annual limitations.
You may begin participating in the 403(b) plan at any time, as well as stop participation at any time.
A 403(b) account is an individual account with no vesting schedule - you decide how much to contribute and how to invest your contributions.
Eligibility
To be eligible to participate in the Rockford Public Schools 403(b) Plan, you must currently receive compensation from the District. Contributions to your 403(b) account will be deducted from your pay while the plan is effective. Note: You do not need to be eligible for insurance benefits in order to participate in the 403(b) plan.
Why Participate in the 403(b) Plan?
Many retirement experts suggest that a retirement income level of at least 70% of your final salary is a good target for people starting to save for retirement. Many people who retire at age 65 could live 20 or more years in retirement. Proper planning for those years is essential to ensuring that you have the income you need. Depending on your personal goals, TRS or IMRF retirement alone may not meet your retirement objectives. The District has made the 403(b) plan available to you if you choose to save additional money for your retirement.
Traditional (Pre-Tax) Contributions
To start your 403(b) contributions you must open an account with one of our approved 403(b) investment providers and complete the Salary Reduction Agreement form. You may wish to consult with a tax or financial advisor to determine the best investment option for your individual situation.
Limits on Contributions
Contributions are by payroll deduction only. The maximum that you can contribute to the 403(b) plan is limited each year by Internal Revenue Code Section 402(g). The 2008 annual limit is $15,500; the 2009 annual limit is $16,500. Note: Employees who are age 50 and over, or who have 15 years of service with the District, may be eligible to contribute more than the annual limit by taking advantage of the Catch-Up Provisions.
Catch-Up Provisions
In the 403(b) plan, there are two options for "catch-up" as you near retirement.
1. Employees who are age 50 and over may make contributions with a higher annual limit. For 2008, the age 50 catch-up limit is $5,000. This limit increases to $5,500 for 2009.
2. Employees who have worked for the District for 15 years or more full-time, and have not taken advantage of all their tax-deferral opportunities in the past, may qualify for a special catch-up provision. This provision allows an additional amount (up to $3,000 annually) to be contributed each year. Note: IRS regulations state that plan participants who are eligible for both catch-up provisions must first exhaust the 15 year service catch-up before making an age 50 catch-up contribution.
Investment Vendor Choices
You may choose to invest with one of 19 approved 403(b) investment providers. See this listing for details on how to contact each company. You may also review their web sites. For more information concerning what products each provider offers, see this listing of company offerings. Note: You are responsible for selecting an investment provider and for selecting and monitoring your investments with that provider.
More Information to Know
You may enroll in, make changes to, or terminate contributions to the 403(b) plan at any time during the year by completing a Salary Reduction Agreement form.
Important Links
Salary Reduction Agreement form
Approved 403(b) Investment Providers
403(b) Investment Provider Company Offerings
Contacts
Contact the Benefits Department at benefits@rps205.com with questions or for help enrolling in the 403(b) plan.
This information is provided with the understanding that it is a source of information and does not constitute legal, tax, or other professional advice. If legal advice or other professional assistance is required, the services of a professional advisor should be sought. |
