Types of Plans
Because your state retirement plan (pension) may not be enough to replace your pre-retirement income – even if you also qualify for Social Security – a tax-deferred 403(b) or 457 retirement account through your school district can help fill that gap.
The government has created several tax-deferred ways for Americans to save for retirement under the IRS tax code. You’ve probably heard of a 401(k) that a private company can offer their employees. School district employees can save through a 403(b) or 457.
Retirement Plan Basics
403(b), 403(b)(7) — These tax-deferred plans are available to employees of educational institutions and certain non-profit organizations. Contributions are made through automatic payroll deductions and invested in your choice of investment options. Some 403(b) plans also allow employer contributions. Your savings grows tax-deferred until withdrawal, at which time you owe regular income taxes on the money you take out. Thanks to the high contribution limit*, a 403(b) is a great way to supplement pension and Social Security benefits, providing the potential for more retirement income.
457 — This tax-deferred plan is available to employees of government agencies (including school districts) and some non-profit organizations. Like 403(b) plans and 401(k) plans, contributions are made through automatic payroll deductions and invested in your choice of investment options. Money grows tax-deferred and you owe taxes when you take withdrawals.
Traditional Individual Retirement Account (IRA) — This individual plan is available to anyone who works for pay. Contributions can be made on a pre-tax basis and your taxable income is reduced by the amount you invest, providing an up-front tax deduction if you meet certain deduction limits. You pay taxes when you take withdrawals. IRAs give you the flexibility to invest in almost any type of security, including stocks, bonds, mutual funds, even real estate.
Roth IRA — This type of IRA provides a way to build a retirement account using after tax contributions that can grow and be withdrawn tax-free as long as you meet certain income requirements.
*Contribution limits are established each year by the IRS and are subject to change.
This information is provided by Security Distributors, in connection with the NEA Retirement Program for retirement plans sponsored by school districts and other employers of NEA members and individual retirement accounts established by NEA members. Security Distributors and certain of its affiliates (collectively, “Security Benefit”) make products available under the NEA Retirement Program, directly or through authorized broker/dealers, pursuant to an agreement with NEA’s wholly owned subsidiary, NEA's Member Benefits Corporation (“MBC”). NEA and MBC are not affiliated with Security Benefit. Neither NEA nor MBC is a registered broker/dealer. All securities brokerage services are performed exclusively by your sales representative’s broker/dealer and not by NEA or MBC.
NEA, NEA Member Benefits and the NEA Member Benefits logo are registered service marks of NEA’s Member Benefits Corporation.