November 14, 2013
Tax-deferred supplemental retirement plan available
You are receiving this notice because of your eligibility to participate in SIU Carbondale’s Supplemental Retirement 403(b) Plan. Below is some general information related to the plan. For more detailed information, or for a copy of the Supplemental Retirement Plan document, please visit our website at http://hr.siu.edu/benefits/SupPlanDocAdmendOne2012.pdf.
What is a 403(b) plan?
The Supplemental Retirement 403(b) plan is a tax-deferred retirement plan designed for employees of public schools and certain other tax-exempt organizations. The plan allows employees to save for their retirement by saving and investing pre-tax dollars in voluntary deferrals through payroll deduction.
The plan is a supplement to the State Universities Retirement System (SURS) pension.
Generally, all common law employees of the University who receive compensation reportable on a Form W-2 who provide services to the University are eligible to participate as long as you contribute at least $200 each year. The only employees not eligible to participate in the plan are non-resident aliens with no U.S. source income and student employees exempt from FICA taxes.
You may elect to defer a portion of your compensation to the Plan on a pre-tax basis. With pre-tax contributions, both federal and state income taxes are deferred on the contributions and any earnings thereon until distributed from the 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 percent 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.
- Additional Savings
Contributing to a 403(b) retirement plan can help you take control of your future. These savings will supplement your SURS pension benefit and/or Social Security, if applicable.
Annual contributions to the plan are limited per IRS regulations. The basic limit for the 2014 calendar year for employees under age 50 is $17,500. Employees age 50 or older can elect to defer an additional $5,500 for the year, for a total maximum deferral of $23,000.
November is the last opportunity to make any changes or increases to your contributions for tax year 2013 (same limits as tax year 2014). If you would like to make changes to increase or maximize your deferral for 2013, a new Salary Reduction Agreement (SRA) must be completed and returned to HR Benefits no later than Thursday, Nov. 14, 2013. The SRA can be located online at http://hr.siu.edu/benefits/tdaforms.html.
You may begin participating in the plan at any time. To enroll in the plan, you must complete both (1) an approved vendor’s application to open an account and (2) a Salary Reduction Agreement (SRA) to elect the contribution amount. The SRA is available online at http://hr.siu.edu/benefits/tdaforms.html. Contributions can be a percent of your salary or a flat dollar amount (whole dollars). Your contribution will continue until the SRA is modified or revoked.
Modifications to your deferral election
You may increase, decrease or stop your contributions to the plan at any time. You may also change or add approved vendor(s) to which your contributions are made at any time. A new SRA will need to be completed to make these changes.
A list of the current approved vendors under the plan is at http://hr.siu.edu/benefits/tdaagt.html. You should contact the vendor representative for information about the Plan investment options and services it offers.
Contact the Human Resource Benefits Office if you have additional questions, or for help enrolling in the Plan. A paper copy of this notice is also available at the HR Benefits Office.
HR Employee Benefits
Miles Hall, Room 105
1255 Douglas Drive, MC 6520
Carbondale, IL 62901