Retirement Savings Programs allow you to save for your retirement while providing you with a tax break. It allows you to select an amount by which the gross salary can be reduced and tax-sheltered. The tax deferred portion of the gross income is not included as part of your gross earnings for State and Federal tax purposes. Thus, the employee receives a current tax advantage. Income taxes are paid at the time funds are withdrawn or at annuitization. The maximum amount an employee can "shelter" in these programs is determined by the Internal Revenue Service and/or the agent of the company with which the employee chooses to enroll.
There are five plan sponsors participating in this program. The account is established in the employee's name as an individual account.
These two plans are administered by the State of California Savings Plus Program at the Department of Personnel Administration. You may obtain more information by visiting the Savings Plus website or by calling toll free: (855) 616-4776.
Contributions to a 403(b) plan are no longer offset by contributions to a 457 plan. For example, for tax year 2014, a participant could elect to contribute up to $17,500 to a 403(b) plan AND up to $17,500 to a 457 plan, for a total contribution of up to $35,000. However, contributions to a 403(b) plan are offset by any contributions to a 401(k) plan in the same tax year. Employees contributing to both a 403(b) and a 401(k) plan are restricted by IRS regulations to a combined total of $17,500.
Each employee is responsible for their own calculations and to make sure the IRS limits are not exceeded.
All employees are eligible to participate regardless of timebase with the exception of certain student classifications.
Enrolllment in the CSU 403(b) Program is through an online process using the VALIC Retirement Manager system. Access Retirement Manager.
The annual maximum exclusion amount is set by the Internal Revenue Service and changes periodically. For 2014, the maximum exclusion allowance is the lesser of $17,500, or 100% of your adjusted gross income. Please contact your tax advisor to determine your personal maximum exclusion amount.
The minimum monthly investment for 403(b) is $15 per month per company. The minimum monthly investment for the 457 and 401(k) plans are $50 for your initial investment, then you can alter the monthly amount to a $20 per month contribution.
The December pay period begins the new tax year (warrant has an issue date of January 1st). This is important for calculating maximum contributions for a tax year.
There are two "catch-up" provisions for making additional contributions; if you qualify, you may participate.
Under Internal Revenue Code IRC) Section 402(g)(7), employees that have at least 15 years of service (full-time equivalent) with the CSU may be eligible to contribute an additional $3,000 per tax year for up to five years, for a total lifetime catch-up of $15,000. Employees who want to take advantage of this catch-up allowance must complete the catch-up form and submit it to Benefits Services.
Under IRC section 414(v), employees who are, or will turn age 50 by the end of the current tax year (December 31) may contribute an additional $5,500 (for 2014) to a 403(b) plan, or to a 401(k) plan, and also contribute an additional $5,500 to a 457 plan.If an employee qualifies for both of the catch-up provisions, additional contributions will first be applied to the 15 year catch-up allowance and then to the age based catch-up provision.
All changes (increases, decreases and cancellations) are done through the online Retirement Manager.