You should have received an e-mail last week with a memo from Kathy Martin reminding you of your eligibility for the Agency’s 403(b) plan. Much of the information is repeated here.
What is a 403(b)? It is a voluntary retirement savings program similar to the 401(k) plan offered by private companies. As an employee, you are eligible to participate in the Agency’s 403(b) plan. The amount you choose to invest is taken from your paycheck pretax (before state and federal taxes are computed) and deposited into your 403(b) account. Your 403(b) contributions and earnings are available at retirement to supplement your IPERS and Social Security income benefits. You will be taxed on the 403(b) withdrawals.
What is a Roth 403(b)? It is similar to other Roth programs in that your contributions are made with after-tax dollars. Your contributions and earnings accumulate tax-free and are available to supplement your IPERS and Social Security income benefits.
Heartland makes the 403(b) and Roth 403(b) program available to you through the State of Iowa’s 403(b) plan, commonly referred to as the Retirement Investors’ Club (RIC).
Effective January 1, 2012, you will have the option to select between six providers: The Hartford, Horace Mann, ING, Security Benefit, TIAA-CREF and VALIC.
Important points to remember about the plan:
• The minimum contribution per pay period, as dictated by our providers, is $10 per pay period.
• You have the option of traditional pre-tax contributions and/or post-tax Roth contributions. You should work with your financial advisor to determine what is best for your retirement planning. If you want to model the effect of the tax savings from a pre-tax investment, go to the Employee Online tab on your Employee Dashboard and click on the “What If” calculator and enter the amount of your pre-tax deduction. This will show you how making the deduction on a pre-tax basis will affect your paycheck. The post-tax Roth investment is designed to offer tax savings at the time of withdrawal and not at the time of investment.
• You can change the amount of your contribution 12 times per year (at the beginning of each month). All changes received by the end of a month will be effective at the beginning of the following month. For example, a change submitted between January 1–31 will be effective on your February 15 paycheck.
• The Agency does not offer matching funds, but it is still very beneficial for you to start saving for retirement, even if you are only able to start with a small amount.
• In 2012, the maximum amount you may contribute per year is 100% of compensation up to $17,000. Also, if you have at least 15 years of service with Heartland or you are at least 50 years old, you may also be able to make additional catch-up contributions.
To start your contributions, contact one of the RIC’s investment providers. Contact information is on the RIC’s website at http://ric.iowa.gov/403b/index.html. On the left side of the page, click on Providers and Investments, then click on Active Providers. Clicking on the Advisor button to the right of each provider will give you a list of agents who are authorized to sell their products. The agent can send you enrollment information and, at your request, will schedule an appointment to discuss your individual financial goals. Click here for Heartland’s enrollment form.
For questions or to schedule a time to get together to discuss starting a 403(b) plan, please contact Kathy Martin, Benefits Specialist, at kmartin@aea11.k12.ia.us. Questions may also be addressed to Steve Jordan, Payroll Specialist, at sjordan@aea11.k12.ia.us.
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