403(b) Retirement Savings Plan Overview
Learn about the 403(b) retirement savings plan offered by Portland Public Schools. Discover who can contribute, how it works with state plans, pre-tax vs. Roth options, reducing taxes, and increasing savings. Get insights on support, employer involvement, and eligibility requirements for this supplemental retirement benefit.
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Portland Public Schools 403(b) Plan PPS/CCC* 403(B) PLAN WEBSITE: WWW.NCOMPLIANCE.COM OCTOBER 7, 2024 / JIM KELLEHER *CCC helps PPS administer the 403(b) program -- Call CCC at 503-968-8961 with any questions
Who can contribute to a 403(b) Plan?
403(b) Audience Who is Eligible? Typically, any staff member with W-2 pay. What is a 403(b) Plan? School district 403(b) Plans are voluntary supplemental retirement savings plans. Designed to supplement retirement benefits available from State pension plans and Social Security. What Contributions Types Are Offered? Pre-tax 403(b) Roth 403(b) 3
Who can help me with my 403(b) plan?
Employer: Deduct $ & Plan Oversight 403(b) Plan 403(b) Plan Support Support CCC: Employees & Retirees Advisor: Optional Help Compliance, Approvals & Questions Team Effort Vendor: Investments & Account Recordkeeper 5
How does the 403(b) Plan work with my State plan?
Use the 403(b) to Increase Retirement Savings 403(b)* pre-tax or Roth 457(b)* pre-tax or Roth IRA pre-tax or Roth Other Savings (after-tax only) State Pension Plan Personal Savings Social Security *Similar to a 401k. 7
Pre-Tax Deferral vs. Roth (Pay Taxes Later or Pay Now) Pre-tax 403(b) Roth 403(b) Employee contributions Pre-tax dollars After-tax dollars Taxable upon withdrawal Tax-free upon withdrawal* Employee withdrawals *Qualified Distribution required for tax-free investment gains: (Reach age 59.5 and Roth 403(b) account has been opened for 5 years) 9
How does a 403(b) reduce taxes & increase savings?
ROTH (after tax) Let s start Let s start with Roth with Roth Contributions Contributions Traditional (before tax) Roth and Traditional 11
Roth 403(b) Tax Benefits Illustration Personal Savings Account Salary Taxes (@20%) Deposit to Savings Account $100 ($20) $80 Investment Earnings (@100%) Taxes (@ 20%) Net Investment Earnings $80 ($16) $64 Total After Tax $ for Retirement $144 12
Traditional 403(b) Tax Benefits Illustration Personal Savings Account Salary Taxes (@20%) Deposit to Savings Account 403(b) Traditional Salary Taxes (0% for Pre-Tax 403(b)) Contribution to 403(b) $100 ($20) $80 $100 $0 $100 Investment Earnings (@100%) Taxes (@ 20%) Net Investment Earnings $80 ($16) $64 Investment Earnings (@100%) Total Pre-Tax Amount in Account $100 $200 Taxes (@ 20%) Total After Tax $ for Retirement ($40) $160 Total After Tax $ for Retirement $144 13
403(b) Tax Benefits Illustration 403(b) Roth Salary Taxes (@20%) Contribution to 403(b) 403(b) Traditional Salary Taxes (0% for Pre-Tax 403(b)) Contribution to 403(b) Personal Savings Account Salary Taxes (@20%) Deposit to Savings Account $100 ($20) $80 $100 $0 $100 $100 ($20) $80 Investment Earnings (@100%) Taxes (@ 20%) Net Investment Earnings $80 ($16) $64 Investment Earnings (@100%) Taxes (0% for Roth) Net Investment Earnings $80 $0 $80 Investment Earnings (@100%) Total Pre-Tax Amount in Account $100 $200 Taxes (@ 20%) Total After Tax $ for Retirement ($40) $160 Total After Tax $ for Retirement $144 Total After Tax $ for Retirement $160 14
What are some of the key 403(b) plan rules?
403(b) Summary $23,000, under age 50 $30,500, age 50 or older Up to $3,000 per year ($15,000 lifetime max) Yes Yes Mutual Funds and Annuities from 10+ Investment Product Providers Yes at 59 Yes Yes Yes IRS Annual Contribution Limits (2024) Special 15 Years of Service Catch-up Limit Pre-tax Deferrals Roth After-tax Deferrals Investment Options Distributions*: Based on Severance Based on Age Based on Hardship Loans Purchase Service Credit Transfers *Early withdrawal penalty of 10% before age 59 unless due to disability, death or separation of service after age 55. 16
Where do my 403(b) contributions get invested?
403(b) Vendor Comparison Type of Financial Advisor used to Educate Employees on Products and Services Offered Products Offered Company Affiliated Representative Independent (work with multiple Vendors) Do-It-Yourself (no financial advisor) Commissions or Sale Charges?1 Vendor Mutual Funds Annuities Roth (Investment Provider) American Funds Equitable (AXA) Fidelity Invesco Security Benefit Vanguard Voya VRIAC 1. Typically, all products are subject to account administration fees and investment management expenses. Some annuity contracts may have surrender charges. 18
403(b) Vendor Comparison (2) 1. Typically, all products are subject to account administration fees and investment management expenses. Some annuity contracts may have surrender charges. 19
What happens to my 403(b) account when I leave the district?
403(b) Options upon changing jobs Rollover to 403(b) at new school district Keep in the 403(b) plan at former employer Rollover to 401(k) at for-profit company Rollover to a personal IRA Take a cash distribution 21
How do I start contributing?
How to make 403(b) Contributions Open an account with a plan Investment Provider. Start your contributions through PeopleSoft Employee Self Service. Visit CCC website for 403(b) Plan Information www.ncompliance.com Call CCC at 503-968-8961 Submit a question at: https://www.ncompliance.com/ask-ccc.aspx 23
403(b) Life Cycle & CCC Engagement Start Now! Make time your friend Salary Reduction Agreement (via PeopleSoft) Accumulation Phase Make changes to address retirement needs Make investment & vendor changes / In(de)crease contributions Decumulation Make spending decisions in retirement Distributions, rollovers, loans, PSCTs 25
Where can I find more information on the 403(b) Plan?
Tools & Info (Links from CCC website) BrokerCheck Oregon s Insurance Resource Page Check a License PPS Vendor information & links including Fee Summary 403(b) General Information Choosing an Investment CCC 403(b) Education Videos 403b Compare (for CA districts but useful information) 27
Compound interest is the eighth wonder of the world. ~ Attributed to Albert Einstein 29
What are some additional Roth considerations?
Roth Benefits & Considerations Combined Roth & Pre-Tax 403(b) Contributions Limit (2024: $23,000 + $7,500 Age 50 Catch-Up) Tax Flexibility in Retirement Higher Limits than Roth IRA (2024: $7,000 + $1,000 Age 50 Catch-Up) Roth Contributions Not Available Under All Vendors or Plans 33
