Voluntary Retirement Plans

Non-VRS Retirement Options: 403(b), 457(b) and Roth plans 

In addition to 403(b) options, you have the opportunity to select from a variety of non-VRS retirement investment accounts facilitated by PenServ. We offer 457(b) investment options as well as post-tax Roth 403(b) and 457(b) options with our existing vendors. Also those employees participating with the Empower Retirement 457 (formerly Great-West) can manage their per pay period contributions through PenServ’s website.

What is the difference between post tax and pre-tax elective deferrals in a retirement plan? Roth [Roth 403(b) and Roth 457(b)] post-tax elective deferrals will not be taxed upon distribution. Additionally, if a distribution from a Roth Elective Deferral account meets certain requirements, the earnings are tax-free as well. Whereas, the contributions and growth on pre-tax contributions [403(b) and 457(b)] will be taxed at the participant’s income tax rate at the time of distribution.

Roth Deferrals (post-tax), Roth Elective Deferral: Is a retirement plan that allows a participant to make contributions with post-tax rather than pre-tax dollars. Contributions designated as Roth Elective Deferral contributions are subject to Federal income tax withholding since those amounts will be currently taxed as wages.

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• What requirements must be met for the earnings on my Roth deferrals to be withdrawn tax free? There are basically two requirements. First the Roth Deferral account must be in existence for 5 years. This 5-year aging begins with the first day of the year “for which” the contribution is made. For example, if you defer for the first time in December of 2016, your 5-year aging begins 1/1/2016. Second, you receive the distribution on attainment of: age 59 ½, death or disability. Note that the first time homebuyer exception which applies in the case of a Roth IRA distribution does not apply to Roth Deferral distributions.
• Why open a Roth plan?

403(b) & 457(b) (pre-tax), Deferral Plans:  By saving on a Pre-Tax basis, you reduce the taxes you pay today and delay paying taxes on the money you save. Taxes are paid when you withdraw the money from the plan. As an employee, you may start participating at any time during your employment.  Employees may contribute the maximum in BOTH types of accounts to augment retirement savings.

• Why open a 457(b) plan?

• 10% IRS penalty for early withdrawal is not applicable upon distribution of your account.
• Ability to defer up to $19,500.00 if you are below age 50 or $26,000.00 if you are age 50 and over, not including your 403(b) deferrals.
• Reduce your taxable income by potentially deferring to both the 403(b) and 457(b) Plans.
• Like a 403(b) Plan, you have the ability to defer both on a Pre-Tax basis and Roth basis.
• Please contact a 457(b) vendor for information on the advantages of a 457(b) plan.

To Sign Up for a 403(b), 457 and Roth Plans Administered by PenServ

1. Review the list of vendors, (available on the HR Intranet page)  contact the vendor and open an account. If you have an existing account with one of the vendors on our list, but wish to add a Roth or 457, you must contact your vendor to do so. After that account is established with the vendor, you can go to PenServ’s website using the instructions in the in the Web Access Guide (available on the HR Intranet page) to designate your contributions.
2. PenServ website is:  http://www.penserv.com and sign up using your vendor account information.
3. For questions call PenServ: 800-849-4001

 Contributions

• Contributions are deducted from your paycheck for the 403(b) and 457(b) plan on a pre-tax basis.  Taxes are deferred until the tax year in which funds are received by you from the plan(s). The IRS increased contribution limits for both the 403(b) and 457 accounts up to $19,500.00 if you are below age 50 or $26,000.00 if you are age 50 and over.

   

• Contributions made into Roth plans are post-tax.

   

• May a participant make both pre-tax elective deferrals and post-tax Roth elective deferrals at the same time? Yes. Participants can elect to have some of their contributions designated as pre-tax elective deferrals and some as post-tax Roth elective deferrals. 

           

*Important: 457 IRS annual maximum includes any contributions you make to the VRS Hybrid 457 plan and includes auto-escalation.

The Universal Availability Notice is posted on the RCPS Human Resources Intranet page.