Glendale Union HSD 403b Special Pay What is a 403b Special Pay? - PDF document

Glendale Union HSD 403b Special Pay

What is a 403b Special Pay?  Additional benefit that allows the district to handle post- employment compensation like sick leave in a tax advantaged manner.  Contributions to the plan are not subject to Social Security or Medicare taxes  This is a savings 7.65% for the employee  Federal and state taxes are deferred until monies are distributed from the account

403b Special Pay Specifics  The district is required by the IRS to define the eligible employee group.  Employees that are part of the group cannot opt out of the plan.  Employees that are not part of the group cannot opt into the plan.  Group design was developed to minimize potential early withdrawal penalties.

403b Special Pay Eligibility  Must qualify for sick leave and/or vacation pay as defined in the appropriate salary schedule AND  Have $2000 or greater in post-employment compensation AND  Meet either of the following age requirements  Be age 54 and 11 months or greater in the month of retirement and retire with the Arizona State Retirement System OR  Be age 59 and 5 months or greater in the month of termination of employment from the district

I’m not eligible, what happens?  Sick leave/vacation payouts occur as defined in the appropriate salary schedule  Would be subject to Social Security and Medicare taxes  Can choose to be paid directly OR  Choose to contribute monies to a 403b/457b  Federal and state taxes deferred for pre-tax 403b/457b  Roth 403b/457b subject to federal and state taxes

I’m eligible, what happens to my $?  Security Benefit was selected as the provider for the districts 403b Special Pay  Phoenix Union HSD and Glendale Union HSD selected Security Benefit through a competitive bid process  Eligible employees can choose to  Keep monies in the plan OR  Roll monies to another plan OR  Cash out of the plan  There are no surrender charges associated with this plan

I’m eligible, what’s next?  When you decide to retire, contact Brad Nassif at 623-435- 6085 to determine approximate value of post employment compensation  Complete section 1 of enrollment form  Located on district website under Employee Resources then Payroll (login required)  Complete enrollment with Steve James of Security Benefit  Phone 480-284-6554  Email sjames@stevejamesfinancial.com

When will contributions occur?  403b Special Pay contribution will occur within the first or second pay day after retirement  403b Special Pay contributions are not indicated on employee pay stub  A letter will be sent along with the pay stub confirming the contribution and the amount

What about ASRS Deductions?  Regardless of whether or not an employee is eligible for the 403b Special Pay, ASRS deductions will occur under the following circumstances  ASRS Member prior to January of 1984 and ASRS using 5 year average in determining retirement benefit OR  Active Service Purchase Agreement where employee chose to use termination pay towards any unpaid balance

A note on 403b Limits  During the current calendar year, amounts invested in pre-tax 403b’s, Roth 403b’s, and 403b Special Pay all have an effect on the maximum limits that can be contributed  If going to Smartschools Plus or another private company and contributing to a 401k, make sure that providers are aware of the total amounts contributed to 403b’s  If going to another school district, make sure those providers are also aware of the total amounts contributed to 403b’s

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