General Information

403(b) Basics

A 403(b) plan, also known as a Tax-Sheltered Annuity (TSA) Plan, is a retirement plan for employees of certain tax-exempt organizations, such as your employer. Individual accounts in a 403(b) plan may include one of the following types:

Benefits

There are three benefits to participating in a 403(b) plan:

You do not pay tax on allowable contributions in the year they are made.
Taxes are paid on allowable contributions once you begin making withdrawals from the plan. (Usually after you retire.)
Allowable contributions to a 403(b) plan are either excluded or deducted from your income.
Earnings and gains on amount in your 403(b) account are not taxed until you withdraw them.
If you make eligible contributions to a 403(b) plan, you may be eligible to receive a tax credit on your federal income taxes.
(Please refer to IRS Publication 571 for additional details.)

Contributions

Only your employer can make contributions to your 403(b) account. These contributions are provided under a salary reduction agreement. This agreement allows your employer to withhold money from your paycheck to be contributed directly into a 403(b) account for your benefit.

Tax Reporting

Generally, you do not report contributions to your 403(b) plan account on your tax return. Your employer will report contributions on your Form W-2.

Universal Availability Notice

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Maximum Allowable Contribution

Your Maximum Allowable Contribution (MAC) is the maximum amount you may contribute to your 403(b) plan during a given year. Your limit may vary from year-to-year based on changes made by the IRS and changes to your personal circumstances. We encourage you to complete a MAC Worksheet every year to ensure you do not exceed your annual contribution limitation (This worksheet can be found on your employer's page).

In 2008, the base contribution limit is $15,500. In 2009, this contribution limit increased to $16,500 and the 2010 limit remains at that level. In 2011, the limit can move up in $500 increments based on a measure of inflation. You may be able to contribute more if you qualify for one of several catch-up’s (see below). If you qualify for the full amount of both catch-up's, you may be able to contribute up to $25,000 in 2010.

Finally, if you reached the age of 50 or older by the end of any calendar year, you may be eligible to make additional catch-up contributions to your 403b account. The maximum catch-up contribution you can make in 2009 is $5,500, or your includable compensation minus your other elective deferrals for the year. In 2010, the limit also remains the same at $5,500. Keep in mindthat catch-up contributions are not used when calculating your MAC. This means that the maximum amount you are allowed to contribute to your 403b account is your catch-up contributions plus your MAC. Also, if you have completed at least 15 years of service with your employer and your lifetime contributions have averaged less than $5,000 per year, you may be eligible to contribute an additional $3,000 in 2010.

If you exceed your annual contribution limit, taxes and additional IRS penalties may apply. Be sure you know and remain below your limit.

Distributions, Rollovers, and Exchanges

Generally, a distributionfrom a 403(b) account may not happen until you meet a distributable event, which include:

Attainment of age 59 1/2
Termination of employment
Becoming disabled
Financial hardship
Death

In most cases, the payments you receive are taxable as ordinary income. After you attain age 70 1/2, you may be required to take a minimum distribution from your 403(b) plan account each year.

You may generally rollover all, or any part of a distribution from a 403(b) plan tax free to an IRA or an eligible retirement plan; however, distributions made due to financial hardship are not eligible to rollover.

You may be able to transfer all or part of your interest from a 403(b) account to another 403(b) account tax free and without having met a distributable event. The receiving 403(b) account must be subject to the same or stricter distribution restrictions. You may also be eligible to transfer money from your 403(b) plan account to a defined benefit governmental plan. Consult your agent or Investment Provider regarding the availability of transfers.

Always consult with your agent or Investment Provider to understand the tax consequences and account specific fees associated with a distribution, rollover, or exchange. In the past, transactions such as distributions, rollovers, hardship withdrawals, loans, and exchanges were generally accomplished through your investment provider without any involvement from your employer. However, new IRS regulations now require your employer and your investment provider to share certain information and to coordinate when performing these transactions. A transaction authorization process is utilized in order to facilitate necessary coordination and information sharing. If you wish to perform a distribution, rollover, hardship, withdrawal, loan, or exchange; your investment provider must receive authorization from your employer's third party administrator, National Benefit Services,LLC. (NBS). Authorization is obtained through submission of an Authorization Form (available on your employer's forms page). Please note that in addition to the Authorization Form, your investment provider will likely still require submission of its own paperwork. Contact your investment provider for additional information.