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San Bernardino
City Unified School District
457(b) Deferred
Compensation Plan
Plan Description
The San
Bernardino City Unified School District 457(b) Deferred
Compensation Plan is a voluntary savings plan designed to
allow employees to defer a portion of their compensation
through payroll deductions. These deferrals are made on a
pre-tax basis and allow employees the opportunity to save
for retirement. The San Bernardino City Unified School
District 457(b) Deferred Compensation Plan is an attractive
alternative to traditional 403(b) “tax sheltered annuity”
programs.
The San
Bernardino City Unified School District 457(b) Deferred
Compensation Plan is set up under Section 457(b) of the
Internal Revenue Code. The Plan works for the most part like
a 401(k) plan.
As a result
of changes in tax laws effective January 1, 2002, 457(b)
plans now have the same features and advantages of 403(b)
and 401(k) plans. However, funds paid out of a 457(b) plan
are not subject to an early withdrawal excise tax (unlike
403(b), IRAs, or 401(k) plans). Listed below are some of the
additional advantages and features of our new Plan.
1. Contribution
Limits:
-
Allowable contribution amount is the lesser of
$16,500 per year or 100% of compensation in 2011 and
$17,000 in 2012.
-
Individuals over age 50 can contribute an additional
$5,500 in 2011 and $6,000 in 2012.
-
Additional “Catch-Up” limits are available.
457 Voluntary Retirement Plan
Final 3 Year Catch-up Worksheet
2.
Distributions:
Distributions are available upon termination of
employment, death, certain types of unforeseen
emergencies, or the attainment of age 70 ½.
Distributions can be:
-
Rolled to an IRA, 403(b), 401(k), or another 457(b)
plan that accepts rollovers,
-
Used
to buy PERS/STRS service, or
-
Taken
as a lump sum or monthly cash distribution (subject
to applicable federal and state income tax.
3.
Investments:
The Plan
will offer participants the choice to select their own
investments or the choice of selecting one of five
professionally managed portfolios. For those
participants who choose to manage their own investments,
the Plan offers a wide selection of high quality,
no-load and load-waived mutual funds. For participants
who choose to have their funds professionally managed,
the Plan offers five professionally managed portfolios
suitable for investors with an investment horizon of
five years or greater. Management will include quarterly
re-evaluation of the investment portfolio, periodic
rebalancing of the portfolio and other professional
investment management services.
4. Penalties:
There is
no 10% excise tax on distributions – not true of 403(b),
IRA, or 401(k) plans. In addition, the Plan being
offered by the District has no surrender charges,
withdrawal penalties or other restrictions/penalties.
This is not true of many 403(b) programs.
5. Loans:
Loans
against an employee’s account balance are available
under this Plan.
6. Taxation:
Distributions are taxed as income at the time the funds
are received as cash. Taxation of principal and interest
can be deferred until the participant reaches 70 ½ at
which time the individual must begin receiving minimum
required distributions as defined by IRS regulations.
7. Company
Offering Services:
The
company chosen to provide the 457(b) Deferred
Compensation Plan is PARS, a company with many years of
proven expertise in administering retirement plans to
public sector employees. Trustee services and
investments are offered through the Trustee/Custodian,
Charles Schwab; and TCG Advisors, LP, is the investment
advisor to the Plan.
8. Protection
From Liability:
Your
District as a plan sponsor is a fiduciary with a 457
plan and is responsible for the types of investments
offered to participants. Most 457 plans do not protect
the District from fiduciary liability. The San
Bernardino City Unified School District offers fiduciary
protection for the District through an Investment
Advisory Agreement with TCG Investment Advisory
Services, LP.
Updated:
November 1, 2011 |
