Today, it’s more important than ever to plan for retirement. Many people grew up with social security, a pension plan, and personal savings. Today however, many employers no longer offer a pension plan. Because of the changing retirement environment, 1 most financial advisors say you need at least 70% of your income to live comfortably.
Both 403(b) and 457(b) Plans must establish rules for eligibility. The Internal Revenue Code rules require that all employees eligible for a: 403(b) Plan be given an opportunity to enroll and/or change contribution levels at least annually. 457(b) Plan be limited to individuals who perform services for the employer.*
Contributions are made on a pre-tax or post-tax basis through a salary reduction agreement. Unlike a 403(b) Plan, 457(b) Plan limits do not have to be coordinated with contributions to 401(k) or 403(b) Plans. Contributions may be made to a 457(b) Plan, even if the annual maximum contribution limit is reached on other retirement plans.
AFPlanServ® will provide forms for each type of distribution allowed under the Plan, and will approve transactions across all vendors. What Employers Need to Know Employers need to be aware of the limits on distributions.