Tax-Deferred Annuities - 403(b) and 457 Accounts

The university provides all employees, with exception of student employees, the opportunity to save for retirement through pre-taxed supplemental retirement plans. A 403(b) plan (also called a tax-sheltered annuity or TSA plan) is a retirement plan offered by public schools and certain tax-exempt organizations. 457 Deferred Compensation Plans are offered by certain state and local governments and non-governmental agencies. The plans allow employees to save for retirement by contributing to individual accounts. Employers can also contribute to employees' plans. Contributions to a 403(b) or a 457 can be payroll deducted and placed into a special savings account that can be accessed at the time of retirement. Employees may elect to have up to 100% of their income (up to IRS limit) deducted and placed into a 403(b) or a 457 plan. The employee is responsible for ensuring that his/her contributions are in compliance with IRS regulations concerning tax-deferred contributions. To enroll in a 403(b) or a 457 plan see the list of participating providers.

Employer-Paid Cash Match Plan

The university offers a Cash Match plan, which can be initiated any time after employment. This program is an employer-paid benefit for salaried faculty and staff who are making contributions to a 403(b) account or 457 deferred compensation plan. Part-time employees are not eligible for the cash match plan. The employer match amount is 50 percent of the employee's contribution up to a maximum of $20 per pay period. The minimum an employee must contribute to their 403(b) or 457 account to participate in the Cash Match plan is $10.

How does the plan work? Example, if the employee contributes $20 per pay period to a 403(b) or 457 account, the cash match would be $10 per pay period. If the employee contributes $40 per pay period, the cash match would be $20 per pay period. The cash match will not exceed $20 per pay period regardless of the amount the employee contributes over $40. If you are contributing to both a 403(b) and 457 account, you are eligible for only one cash match. If you are enrolled in the VRS Hybrid Retirement plan you are not eligible for the 403(b) or 457 employer cash match unless you are contributing the additional four percent voluntary contribution to the Hybrid plan.

Roth IRA

Employees may invest in a tax-advantaged Roth IRA retirement account. Employee-only contributions are made with after-tax dollars and are tax-free at the time of withdrawal. Employees investing in Roth IRAs are responsible for ensuring that their contributions are in compliance with IRS regulations. Eligibility to participate in a Roth IRA depends on several factors such as adjusted gross income, your tax-filing status, and current participation in a company-sponsored retirement plan. Also, employee and/or spouse must be working to contribute to a Roth IRA account. A financial advisor will be able to provide you with additional information on a Roth IRA. To enroll or for questions related to Roth IRA see the list of participating providers.

Roth 403(b)

Employees may invest in a Roth 403(b), this is another option to help save for retirement.  Roth 403(b) contributions and withdrawals are taxed differently than pretax 403(b) contributions.  Qualified distributions from a Roth 403(b) account at retirement are not subject to federal income tax.  The earnings set aside for a Roth 403(b) account is contributed to the plan after state and federal income tax has been withheld.  

Always consult with your personal tax advisor and/or financial advisor prior to making any decisions about your retirement.

If you have questions about Supplemental Retirement Accounts contact a Human Resources Benefits Specialist or email benefits@jmu.edu.