The Internal Revenue Service and the Department of the Treasury released final 403(b) regulations on July 24, 2007, more than 2½ years after publication of proposed regulations in November 2004. 403(b) plan sponsors are required to comply with the final regulations by January 1, 2009.
Historically plan sponsors did not regard their entity as a plan administrator for the 403(b) plan, but rather a simple pass-through mechanism to collect employee’s pretax annuity contributions and forward it on to the 403(b) vendor. However, the 403(b) regulations require plan sponsors to act in a much more active role as a plan administrator, and the final 403(b) regulations impose requirements to ensure plan sponsors are taking on that role. Among other requirements, the final 403(b) regulations require plan sponsors to adopt a written plan document, detailing the employee eligibility requirements, dollar limits and benefits of the plan effective January 1, 2009.
In response to the final regulations, Rogue Community College has revamped its 403(b) Plan, and will be administering the plan differently than in the past. The Rogue Community College Board of Education has adopted the new 403(b) Plan Document and list of approved vendors (below) to be in effect January 1, 2009.
Among other changes, all current participants who would like to continue making contributions to an approved vendor will be asked to complete a new Salary Reduction Agreement. Participants making contributions to vendors that are no longer on the approved list will not be able to make contributions to an unapproved vendor after December 31, 2008.
If you are interested in learning more about our 403(b) Plan, eligibility, or how to start making contributions to a 403(b) retirement account, please review the documents below.
Approved 403(b) vendor list as of January 1, 2009
American Funds
Oppenheimer Funds
ReliaStar Life Insurance Company (ING Life Insurance & Annuity Company)
TIAA-CREF
The Variable Annuity Life Insurance Company (AIG VALIC)
What is a 403(b) Plan?
A 403(b) plan, often referred to as a tax-sheltered annuity plan (403b/TSA),
or simply "TSA plan" is a retirement plan that,
if operated properly by a qualified employer, is tax-exempt.
A 403(b) plan is a tax-deferred retirement plan available to employees of public educational institutions and certain tax-exempt organizations.
Is Rogue Community College a qualified employer ?
Yes. Rogue Community College is an eligible public higher education institution under Section 170(b)(1)(A)(ii) of the Code and is authorized to offer a program qualified under Section 403(b) of the Internal Revenue Code.
How does a 403(b) Plan work?
A 403(b) plan allows you to make pretax contributions by convenient payroll reduction and save that money for your retirement. You set aside money for retirement on a pre tax basis through a salary reduction agreement with your employer. You choose from among the vendors offered by your employer where your money is to be invested. The money grows tax free until withdrawal at retirement.
403(b) plans were created to encourage long-term savings, so 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. Short-term needs can sometimes be met by nontaxable loans. This type of loan makes it possible for you to access your account without permanently reducing your balance. Though you should remember that defaulted loan amounts will be taxed as ordinary income and might be subject to a 10% tax penalty if you are under age 59½.
Why contribute to a 403(b) plan?
Participating in your plan can provide a number of benefits, including the following:
Lower taxes today
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. For example, if your federal marginal income tax rate is 25% and you contribute $100 a month to a 403(b) plan, you’ve reduced your federal income taxes by roughly $25. In effect, your $100 contribution costs you only $75. The tax saving increases with the size of your 403(b) contribution.
Tax-deferred growth and compounding interest
In a 403(b) plan, your interest and earnings accrue tax deferred. That 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.
You take the initiative
Contributing to a 403(b) retirement plan can help you take control of your future. Other sources of retirement income, including state pension plans and, if applicable, 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.
Am I eligible to participate in a 403(b) plan?
In order to be eligible to participate, you must work a minimum of 1,000 per calendar year. This is the equivalent of working 20 hours/week for the entire calendar year. In order to determine whether part time employees are eligible to participate, the Human Resources department will look back to the previous year to determine whether the part-time employee worked the required minimum number of hours.
When can I enroll in a 403(b) retirement account?
Newly eligible employees may enroll within 30 days of being hired into an eligible position. The Salary Reduction Agreement must be received by HR within 30 days of the date of hire, and contributions will begin with the payroll cycle immediately following.
In addition, Rogue Community College offers a quarterly open enrollment period for the 403(b) plan. If you submit a Salary Reduction Agreement by the deadline (the last day of the open enrollment period), your first contribution will be deducted from the payroll immediately following the enrollment period. If your form comes in after the deadline, your first contribution will be effective with the next quarterly enrollment date. Enrollment Dates are as follows:
| Enrollment Date | Open Enrollment Period | Payroll Contribution Start Date |
|---|---|---|
| January 1 | December 1 - 31 | January 31 |
| April 1 | March 1 - March 31 | April 30 |
| July 1 | June 1 - June 30 | July 31 |
| October 1 | September 1 - September 30 | October 31 |
When can I stop making contributions to my 403(b) account ?
You can stop making contributions to your 403(b) account at any time by providing a Salary Reduction Agreement to the HR Specialist II Retirement Programs by the payroll deadline. If notice is not received by the deadline, your contributions will stop with the following month's payroll. However, you can only restart contributions on the quarterly enrollment dates as explained above.
How much can I contribute to my 403(b) account ?
The 403b contribution limit for 2012 is $17,000. The age 50+ catchup is currently $5,000.
How do I start a 403(b) retirement account?
In order to begin a 403(b) account, you must first select a vendor from among the approved vendor list. You will work with your financial advisor to open a 403(b) account and determine the amount you would like to contribute each month. Finally, you will need to complete a Salary Reduction Agreement, and send it to the HR Specialist II Retirement Programs in the Human Resources Office by the quarterly enrollment period deadline. You will need to make sure all appropriate paperwork is complete and your account is open with the vendor prior to submitting your Salary Reduction Agreement to Human Resources. If your paperwork is incomplete or your account is not already open with the 403b vendor, we will be unable to process your request and will return the paperwork to you to complete by the deadline.
Who do I contact if I have additional questions ?
Please be sure to consult with your legal or tax advisor before participating in the 403(b) plan. Rogue Community College does not provide tax or legal advice. Your financial advisor can help answer any questions you have relating to your individual investment situation. For additional information about participation, please contact Christine Murff, HR Specialist II-Retirement, in Human Resources at (541) 956-7025.
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