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 grow 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IRA — This type of IRA provides a way to build a retirement account using after tax contributions that can grow and be withdrawn tax-free as long as you meet certain income requirements.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.
The NEA Retirement Program (“NEA Program”) provides investment products 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 these products available to plans and accounts pursuant to an agreement with NEA’s wholly owned subsidiary, Member Benefits (“MB”), which markets the NEA Program. Security Benefit has the exclusive right to offer the products directly or through other authorized broker/dealers, and MB in marketing the NEA Program generally may not enter into arrangements with other providers of similar investment programs or otherwise promote to NEA members or their employees any investment products that compete with the NEA Program products. Security Benefit pays an annual fee to MB under the agreement. You may wish to take into account this agreement and arrangement when considering and evaluating any communications relating to NEA Retirement products.
NEA and MB are not affiliated with Security Benefit. Neither NEA nor MB is a registered broker/dealer. All securities brokerage services are performed exclusively by your sales representative’s broker/dealer and not by NEA or MB.
NEA, NEA Member Benefits and the NEA Member Benefits logo are registered service marks of NEA Member Benefits.