Voluntary Retirement Plans

403(b), and new 457(b) & Roth Plans

New opportunities to invest in your future starting January 2017! You will have the opportunity to select from a greater variety of non-VRS retirement investment accounts facilitated by PenServ. We are offering additional 457(b) investment options as well as post-tax Roth 403(b) and 457(b) options with our existing vendors. Beginning in January, those participating with the Empower Retirement 457 (formerly Great-West) can manage their per pay period contributions through PenServ’s website. Additional information will be distributed in January 2017.

 

  • Pre-Tax Deferrals, 403(b) & 457(b) retirement plans:  By saving on a Pre-Tax basis, you reduce the taxes you pay today and delay paying taxes on the money you save. Taxes are paid when you withdraw the money from the plan. As an employee, you may start participating at any time during your employment.  Employees may contribute the maximum in BOTH types of accounts to augment retirement savings.

 

  • Roth Deferrals (after tax), Roth Elective Deferral: This a retirement plan that allows a participant to make contributions with post-tax rather than pre-tax dollars. Contributions designated as Roth Elective Deferral contributions are subject to Federal income tax withholding since those amounts will be currently taxed as wages.

     

  • What requirements must be met for the earnings on my Roth deferrals to be withdrawn tax free? There are basically two requirements. First the Roth Deferral account must be in existence for 5 years. This 5-year aging begins with the first day of the year “for which” the contribution is made. For example, if you defer for the first time in December of 2016, your 5-year aging begins 1/1/2016.The second requirement is that you receive the distribution on account of: attainment of age 59 ½, death or disability. Note that the first time homebuyer exception which applies in the case of a Roth IRA distribution does not apply to Roth Deferral distributions.

 

What is the difference between post-tax and pre-tax elective deferrals in a retirement plan?

Post-tax elective deferrals will not be taxed upon distribution. Additionally, if a distribution from a Roth Elective Deferral account meets certain requirements, the earnings are tax-free as well. Whereas, the contributions and growth on pre-tax contributions will be taxed at the participant’s income tax rate at the time of distribution.

 

To Sign Up for a 403(b), 457 and Roth Plans Administered by PenServ

 

  1. Review the list of vendors (updated list will be provided in January 2017), contact the vendor and open an account. If you have an existing account with one of the vendors on our list, but wish to add a new Roth or 457, you must contact your vendor to do so. Once that account is established, you can then go to PenServ’s website to designate your contributions.
  2. PenServ website is:  http://www.penserv.com and sign up using your vendor account information.
  3. For questions call PenServ: 800-849-4001

 

 Contributions

  • Contributions are deducted from your paycheck for the 403(b) and 457(b) plan on a pre-tax basis.  Taxes are deferred until the tax year in which funds are received by you from the plan(s).

     

  • Contributions made into Roth plans are post-tax.

     

  • May a participant make both pre-tax elective deferrals and post-tax Roth elective deferrals at the same time? Yes. Participants can elect to have some of their contributions designated as pre-tax elective deferrals and some as post-tax Roth elective deferrals.  The sum of all participant elective deferrals cannot exceed $18,000 for 2017 ($24,000 if the participant is age 50 or over).

     

 

2017

403(b)

457

Maximum annual contribution*

 

$18,000

 

$17,000

 

$18,000

Age 50 “Catch up” (additional contribution amount permitted)

$6,000

 

 

$6,000

 

 

*Important: 457 IRS annual maximum includes any contributions you make to the VRS Hybrid 457 plan and includes auto-escalation.

 

 

The 2017 Universal Availability Notice will be posted on the RCPS Human Resources Intranet page when issued.

 

40 Douglass Avenue NW, Roanoke, VA 24012 Phone 540-853-2502