Is Social Security and CalPERS Enough?

Bridge the Gap

The 403(b) is a tax-sheltered account developed by the IRS to encourage employees of educational institutions to save pre-tax dollars for retirement. A 403(b) plan can provide a healthy supplement to your pension plan.

There is a limit on elective deferrals — the most an employee can contribute to a 403(b) account out of salary (check with your tax consultant or the IRS web site). Employees who are age 50 or more at the end of the calendar year can also make catch-up contributions of $6,000 in 2015 - 2018 beyond the basic limit on elective deferrals.

To view a list of investment providers for Mt. SAC, check the 403b compare web site. A representative from SchoolsFirst Federal Credit Union, Mt. SAC’s official vendor, is on campus once a month or you may sign up directly at the Schools First web site.

Additionally, a 457 plan is available. 457(b) plans operate much like 403(b) plans in terms of taxes and loans:

  • Contributions up to certain limits are pre-tax, reducing your current federal and state income taxes

  • Earnings on your investment grow tax deferred, giving you a much larger nest egg than a similar taxable investment

  • Distributions are taxable at current tax rates as ordinary income; distributions may be made when you leave your employer or in the case of death, disability or unforeseeable emergency; distributed funds cannot be rolled back into the plan, and penalties may apply in some cases

A representative from SchoolsFirst is on campus once a month and can help you sign up for a 403B, Roth 403B, or 457. You may may sign up directly at the Schools First web site.