Voluntary Tax-Shelter/Retirement Plans 403(b) Plan
Section 403(b) of the Federal tax code regulates the Governors State Supplemental 403(b) Retirement Plan. A 403(b) retirement plan is similar to a 401(k) plan. Both plans allow participants to set aside additional money for retirement. However, the biggest difference between the two plans is that a 401(k) plan covers private-sector workers, and a 403(b) plan is designed for employees of public schools and certain tax-exempt organizations. The Governors State University 403(b) plan offers Pre-Tax Accumulation Account and Rollover Account.
Investment choices with TIAA-CREF, VALIC, The Legend Group, and Fidelity Investments. Important: The Internal Revenue Service issued Final 403(b) Regulations that took effect January 1, 2009. To comply with these regulations, the University updated the Plan to comply with final Income Tax Regulations issued under section 403(b) of the Code.
403(b) Plan in Brief
As a participant in the Governors State University 403(b) Plan you may contribute pre-tax funds to the plan.
- Participation in this plan is strictly voluntary and does not reduce any of your University benefits based on full salary such as retirement, life insurance, disability or survivor benefits.
- Allows you the opportunity to accumulate additional retirement funds, as a supplement to your State Universities Retirement System (SURS) pension.
- Provides you to contribute a flat dollar amount, determined by you, which is deducted from your paycheck. The amount of income that can be contributed is subject to IRS limitations. (This is a combined limit of both traditional (pre-tax) and Roth (post-tax) contributions.)
- You may begin participating in the 403(b) plan at any time.
- A 403(b) account is an individual account with no vesting schedule - you decide how much to contribute and how to invest your contributions.
To be eligible to participate in the Governors State University Supplemental 403(b) Retirement Plan, you must currently receive compensation from the University. Contributions to your 403(b) account will be deducted from your pay while the plan is effective. Each individual who is a common law employee who receives Compensation reportable on a Form W-2 for services provided to the University, except Student Teachers and Graduate Assistants, will be eligible to participate in this Plan.
Why Participate in the 403(b) Plan?
During retirement employees can estimate to receive approximately 40 – 50% of their average wage. If you know that you can’t live off of half of your salary now, then you know it is important to start saving something each paycheck for additional retirement savings above the mandatory SURS amount.
Many retirement experts suggest that a retirement income level of at least 70% of your final salary is a good target for people starting to save for retirement. Many people who retire at age 65 could live 20 or more years in retirement. Proper planning for those years is essential to ensuring that you have the income you need. Depending on your personal goals, SURS alone may not meet your retirement objectives.
Investment Vendor Choices - to open an account please contact the below vendors directly:
Forms:403B Salary Reduction Form