403(b) Info for Employees

The Valic 403(b) and Valic 457(b) Plans are open to all Rutherford County School employees. There is no employer match for these plans. The minimum contribution is $20 per month. You can contact VALIC for an appointment at 615.221.2541. Additional information is available at www.valic.com/rutherford. The Valic enrollment phone number is 888.569.7055.

State of Tennessee 401(k) – Empower Retirement (through Great West) – This 401(k) plan is part of the TCRS Hybrid Retirement Plan. (RCS employees who are not in the TCRS Hybrid Retirement Plan can join this 401(k) plan and make employee contributions. There is no employer match for this group of RCS employees.) The minimum contribution is $10 per month or 1.0%. https://participant.empower-retirement.com/ui/login-ui/#/login

An employee can contribute up to $18,000 per year to a 457(b) account and the same $18,000 amount to either a 403(b) account or a 401(k) account for a total of $36,000. The maximum is higher if you are over 49. (Our plan does not offer the “additional catchup” feature.)

VALIC offers three types of 403(b) and 457(b) accounts. Each type offers a broad variety of investment options. Your 403(b) or 457(b) account can also be either a traditional tax-deferred account or a Roth account which uses after-tax income with a potential for tax-free growth.

403(b) – Valic 457(b) – Valic

Portfolio Director’s Choice - a full service fixed and variable annuity program Portfolio Director’s Choice - a full service fixed and variable annuity program

Profile Retirement Program - a no-load mutual fund program Profile Retirement Program - a no-load mutual fund program

Schwab Personal Choice Retirement Account (PCRA), a self-monitored brokerage investment program that is designed for a more experienced investor.

The PCRA 403(b)/457(b) option is a true self-directed mutual fund brokerage account. After each pay period, you need to decide how you want to invest your 403(b)/457(b) contribution, log in to your Schwab PCRA account, select the mutual funds you want, and execute the purchase. You may incur trading fees. If you do nothing, your 403(b)/457(b) contributions go into a money market account and stay there until you execute a trade.

If you choose to open a PCRA account, you will have to sign a disclaimer stating that you understand your responsibilities with a PCRA account and how the account functions. If you are not comfortable researching and executing trades, one of the other Valic options listed above may be a better choice for you.

· Some Major Differences between a 457(b) Account and a 403(b) or 401(k) Account:·

· 403(b) or 401(k) - if you withdraw assets prior to age 59½, the IRS will impose a 10 percent penalty tax on the amount to be included in your taxable income in addition to the normal income tax, in most cases. However if you are under 59½ and no longer work for RCS you can roll your 403(b) account to an IRA without penalty.

403(b) – Hardship withdrawals that meet the IRS guidelines are allowed but are taxable plus the 10% penalty.

· 457(b) - There is no federal 10 percent premature distribution penalty imposed on withdrawals from a 457(b) plan when separating from service. You can also roll your 457(b) account to an IRA without penalty if you have separated from service.

457(b) - Unforeseen emergency withdrawals are permitted from your 457(b) account if the employee is under severe financial distress. The emergency must be unexpected and unanticipated. The IRS definition of what qualifies as an unforeseen emergency is very specific and more stringent than the 403(b) definition of a hardship. Also the employee must have no other resources to handle the hardship, such as selling assets or obtaining a loan. Check with Valic for more information.

Grandfathered 403(b) Providers

VALIC has the contract for our 403(b) plan and is the only 403(b) provider that can accept current 403(b) contributions from RCS employees. The following table shows the grandfathered 403(b) providers who can accept 403(b) transfers and may permit loans or hardship withdrawals:

Ameriprise Financial ING / Reliastar

American Fidelity Assurance Co. Life Insurance Company of the Southwest

AXA Equitable Lincoln Financial Group

Commonwealth Annuity Security Benefit

Great American Financial Resources, Inc USAA– no loans or hardship withdrawals

Horace Mann Life Insurance Company

If you don’t see your former 403(b) provider, that provider has chosen not to participate in the information sharing that is now required by the IRS. If you are an active RCS employee it may be necessary to transfer that account to VALIC if you need to access it before age 59 ½.

Certificates for Loans or Hardship Withdrawals

A loan or hardship withdrawal certificate from the Retirement Manager website is needed for any loan or hardship withdrawal from Valic or one of the grandfathered providers. This certificate must be submitted along with the loan or hardship withdrawal form you get from your 403(b)/457(b) provider.

You will need to produce your own certificate by going to the Retirement Manager website:

https://www.myretirementmanager.com/?rutherford

Transfer to one of the grandfathered 403(b) providers - IRS regulations permit current employees under age 59 ½ to make transfers between our 403(b) providers - VALIC or one of the grandfathered providers listed above. It is your responsibility to ask about any surrender charges you may incur when you make a transfer from one of the grandfathered providers to one of the other providers or an IRA. Valic has no surrender fees except on fixed annuities.

Transfers to an IRA - Active RCS employee’s under age 59 ½ cannot transfer funds in our 403(b) plan to an IRA. Former employees and current employees who are at least 59 ½ can transfer funds to an IRA.

Not intended as tax or legal advice. Neither your employer nor the investment providers offering savings products under the plan can provide you with tax or legal advice.

Rutherford County Schools

Deferred Compendation (Supplemental Retirement) Options