Annual Notice to Eligible Employees of the Opportunity to Make Elective Deferrals to the Naperville CUSD 203 403(b) Retirement Plan
Naperville Community Unit School District 203 offers our eligible employees the opportunity to save for retirement by participating in the NAPERVILLE CUSD 203 403(b) RETIREMENT PLAN (the “403(b) plan”). You can participate in this plan by making pre-tax or post-tax contributions. You are eligible to participate in this plan, whether or not you are actively contributing to it. You have the right to make elective deferrals to the Naperville CUSD 203 403(b) Plan. A 403(b) plan allows you to contribute a portion of your compensation on a pre-tax or post-tax basis in order to save for your retirement. Contributions are made to the plan by payroll deduction.
What are the benefits of contributing to a pre-tax 403(b) plan?
The pre-tax elective deferrals that you make to the plan now are not taxed until you withdraw them. This means you are lowering your taxable income now, and will potentially lower the amount of income tax you will pay on those funds at the time of withdrawal when you may be in a lower tax bracket. Both your pre-tax elective deferrals and earnings grow tax-free until they are withdrawn.
What do I need to do in order to start making elective deferrals?
You will need to make an election regarding how much of your compensation you wish to defer to the 403(b) plan. You will also need to determine where you want to invest your contributions. The list of approved vendor(s) and their contact information can be located on our Business Office InsideNaperville203 site. This list can also be obtained by stopping by the Business Office at the PSAC. The financial advisor representing each vendor will provide you with the forms that will set up the contract or account with the vendor. Once you have completed the paperwork provided by the selected financial advisor please complete and return a Salary Reduction Agreement (SRA) to Donna Cook, Payroll Specialist, in the District 203 Business Office. Please note that prior to completing and returning an SRA, you must establish an account with the appropriate investment provider(s) that you have indicated on the SRA and you may also need to provide any additional information that may be required to enroll you in the 403(b) plan.
Already contributing the 403(b) plan?
If you are already currently contributing to the 403(b) plan, you may be able to increase your pre-tax contributions. To change your contributions, contact your investment provider in order to complete and return a Salary Reduction Agreement to Donna Cook, Payroll Specialist, in the District 203 Business Office.
Of course, you can keep your contributions at their current level. In the alternative, if your current financial situation means that you need to lower your savings for retirement, you can change your contribution rate by completing and returning a Salary Reduction Agreement as described above.
How much can I contribute to a 403(b) plan?
In 2021, you can make elective deferrals up to $19,500. As this amount is subject to cost of living increases as set by the government, this amount may increase over time. If you will be age 50 or older sometime during the 2021 calendar year, you may be eligible to contribute an additional amount that is known as an “age 50 catch-up contribution.” The limit on the age 50 catch-up contribution is $6,500 and can be contributed on top of the deferral limit of $19,500. Consequently, participants eligible to make the age 50 catch-up contributions can contribute up to $26,000 to the 403(b) Plan for the 2021 calendar year.
In addition to the age 50 catch-up contribution, If you have completed at least 15 years of service with Naperville CUSD 203 you may be eligible to contribute up to $3,000 a year above the elective deferral limit until the amount of the cumulative annual additional contributions made using this special rule equals $15,000. Participants who are eligible for both the age 50 catch-up rule and the 15 year of service catch-up contribution are required to use the 15 year of service catch-up contribution first.
This Notice is not intended as tax or legal advice. Neither your employer nor the investment providers offering retirement savings products under the plan can provide you with tax or legal advice. Employees are encouraged to contact their financial representative or tax professional with any questions.