Do I need my employer’s consent to contribute to a 403(b), Roth 403(b) or 457 Plan?
Yes. Your employer must agree to make contributions to your appropriate account in accordance with a salary reduction agreement. This is an agreement between the employer and employee under which the employee agrees to take a reduction in salary or to forego a salary increase and the employer contributes that amount to an account for that employee.
When can 403(b) money be accessed without penalty?
Generally, penalty-free distribution from a 403(b) cannot occur until the participant:
-Reaches age 59 1/2
-Separates from service in the year turning 55 (and must be retired)
-Retire before age 55 - Eligible for Substantially Equal Periodic Payments (SEPP). Participants who have retired early (before age 55), but want access to their 403(b) without penalty can do so using SEPP. This provision requires that you take a series of substantially equal periodic payments. The key is that once you start these payments they must continue for five years or until you reach 59 1/2, whichever takes longer. If you start at age 58 you must continue until you are 63 (minimum 5 years)
-Becomes disabled (as defined in section 72(m)(7) of the Internal Revenue Code)
-Through a loan (some investment companies/or employers allow this, some do not)
What are the options for switching Jobs?
403(b), Roth 403(b) and 457 accounts can be transferred to your new employers corresponding plan, as long as your new employer will accept the transfer. (Not all new employers will accept transfers from an outside plan so be sure to check). Roll the money over to a Rollover IRA or Roth IRA
Note: If you roll 457 money into a 403(b), IRA or any other plan [other than a 457(b) plan], you will lose the no early withdrawal penalty benefit. Conversely, if you roll 403(b) money into a 457(b) plan you do not avoid the 10% early withdrawal penalty. The plan provider or sponsor has to account for this money separately. As in all cases, you cannot roll over money unless the plan sponsor and product provider allow for it.
What companies can I start a 403(b), Roth 403(b) or 457 with?
Each school district has their own approved providers. Click your school districts link within the webedportal website to find out which providers are approved or call your districts HR Department.
Before committing to any investment option, what are some questions I should ask?
Will I be penalized for pulling my money out?
Will there be in surrender fees?
What are my investment choices?
What annual fees will I pay?
How is the company rated?
Can I change the amount I contribute?
Yes.But you might have to wait for a specific date. Some districts limit the number of changes during a year. It’s best to ask about this before you begin contributing.
How long after my contribution is deducted from my paycheck should it take to be credited to my retirement account?
Employers are required to transmit employee contributions to retirement plans as soon as they can reasonably be segregated from the employer’s general assets, but not later than the 15th business day of the month immediately after the month in which the contributions were withheld or received by the employer. Translation: the maximum time it should take is 45 days, however, employers can and should complete this process much quicker. It is not uncommon for employers to complete this process the same day that paychecks are issued.
What are the distribution options for 457 plan?
A big advantage to the 457(b) plan is that it is not subject to the age 59 1/2 withdrawal rule. This means there is no 10% penalty for early withdrawal at retirement or upon termination.
Can I stop contributing altogether?
Yes,You may stop contributing at any time.