403(b)/457(b) for School Districts

Alaska 403(b) Plans*

Encourage employees to supplement their retirement income with a 403(b) tax-deferred annuity (TDA). Because depending on their retirement age, they could live another 20 to 30 years. And Social Security and their state teacher retirement pension may not replace their pre-retirement income.

The benefits of a 403(b) TDA include:

• Contributions payroll reduced before taxes, thus lowering employees’ current income tax.
• Higher contribution limits than Individual Retirement Annuities (IRAs).
• Income taxes deferred until withdrawal at retirement, when employees may be in a lower tax bracket.
• A variety of distribution options.
• Disciplined savings through regular payroll reduction.
• No reduction to Social Security benefits.

Alaska 457(b) Plans*

A 457(b) plan is an employer plan. As such, you offer the plan to your employees and tailor it to meet their needs. Horace Mann provides the annuity product for the program and assists you with its administration.

Why offer a 457(b) deferred-compensation program?

• A 457(b) program gives employees the opportunity to accumulate more for retirement tax-deferred. Educators who already have a 403(b) annuity and have contributed the maximum amount can use the 457(b) to increase the amount they’re putting aside for retirement.
• Providing a 457(b) program gives employees another incentive to stay in your school and shows you care about their long term financial security.
• A 457(b) program helps you monitor your employees’ retirement plans because, once established, you receive regular reports on their investment choices.
• Employees nearing retirement (50 or older) can make an additional annual $1,000 payment to their 457(b), and this amount will increase over time. Another catch-up provision is available for those within three years of retirement.

*All information from Horace Mann.