Tax Deferred Options
Tax Deferred Options
Salary Reduction contributions for retirement are taken from your salary before taxes are withheld.
- Since they are tax-deferred, salary reduction contributions and earnings are taxable as income when you receive them.
- Most state and local taxes are also deferred until benefits are received.
- When you elect to participate, a portion of your salary is set aside (on a pre-tax basis) to save toward supplementing your primary retirement plan and social security.
Classified and Non-classified employees who are under the Office of Higher Education and who are eligible for benefits are eligible to contribute to either or both types of tax-deferred plans:
- a 403(b) Defined Contribution plan (GSRA)
- a 457(b) Deferred Compensation plan
- The maximum annual contribution limit is determined by the IRS each year.
(In 2007 that amount is $15,500) - If you are age 50 or older, you can contribute an additional amount.
(In 2007 that amount is $5,000) - The minimum contribution to a 403(b) plan is 1% of salary.
- The minimum contribution to a 457(b) plan is $25.00 per pay period.
- You can enroll in either or both of these plans at any time.
- You can change your contributions at any time.
All eligible employees can contribute the maximum permissible to both plans.
The features and benefits of the two plans differ slightly.
In a 403(b) GSRA account:
- you can take a loan against your money,
- if you experience a catastrophic event in your life, you are able to apply for a hardship withdrawal,
- if you decide to withdraw your money before age 59 ½, you will have to pay a penalty as well as all income taxes.
With a 457(b) account:
- loans are not available,
- hardship withdrawals are more difficult to obtain
- if upon termination you decide to withdraw your money before you are 59 ½, there is no penalty. You will, however, pay all income taxes on the amount withdrawn.
- ING Representative Campus Schedule
Call Employee Benefits at 874-2921, 874-2778 or 874-9054 with any questions.
