Waddell & Reed

Public Educational Institutions

Your employee retirement program must suit your particular needs as a tax-exempt organization. That’s why Waddell & Reed offers retirement benefit plan options for non-profit organizations such as educational institutions, state and local governments and private sector 501(c)(3) organizations.

What is a 403(b)(7)/TSA?
A 403(b) account is an employer-sponsored retirement plan for 501(c)(3) organizations and public educational institutions where plan assets are invested in a 403(b)(7) mutual fund account. Many public educational institutions offer 403(b)(7) plans to their employees.

403(b)(7) At A Glance

Administrator Testing None.
Establishment All plans must have a written plan document.
Employee Contribution Limit Maximum employee deferral is the lesser of 100 percent of income after application of FICA or $18,000.
Catch-up Contribution Up to $6,000 for participants age 50 or older.
15 Years Special Salary Deferral Contribution You may have the potential to contribute up to an additional $3,000 per year, with a life time limit of $15,000. Special rules apply.
Employer Contributions Public educational institutions may provide an employer discretionary or match up to 25 percent limit combined.
Vesting Employee contributions are 100 percent vested.
Loans Available Yes, if employer elects on Plan Adoption Agreement.
Employee Eligibility Requirements Universal coverage of employees required.
Total Employee/Employer Maximum Contribution $53,000.
Total Employer/Employee Maximum Contribution With Catch-Up $59,000.

403(b)(7) Benefits

Employer Benefits

  • Generally, 403(b) plans funded solely by employee salary deferrals do not require the filing of an annual IRS Form 5500.
  • Attract and retain quality employees.
  • Improved employee morale, productivity and employer/employee relations.

Employee Benefits

  • Save for retirement with pre-tax dollars.
  • Earnings are tax deferred until withdrawn.
  • Contribution limits are greater than those of IRAs.
  • Contribution amounts are flexible.
  • Special salary-deferral contribution limits for tenured employees may allow for greater retirement savings.

What is a 457 Plan?
The 457 Plan, sponsored by public education institutions and government entities, is a deferred- compensation plan that is funded by eligible employees through salary reduction. The 457 Plan also can be made available to a select group of management and highly compensated employees of certain tax-exempt organizations.

457 Plan At A Glance

Administrator Testing None.
Employee Contribution Limit Maximum employee deferral is the lesser of 100 percent of income after application of FICA or $18,000.
Catch-up Contributions Up to $6,000 for participants age 50 or older.
Special Catch Up Contributions Employees within three years of the retirement age specified in the plan document may qualify for a special 457 plan catch-up provision.
Loans Available Yes, if employer elects in the Plan document.
Employee Eligibility Requirements All employees are eligible.
Total Employee/Employer Maximum Contribution $18,000. Employers may contribute to the plan on behalf of participants. Employer contributions constitute compensation earned and deferred by the participant.
Annual Custodial Fee None.

457 Plan Benefits

Employer Benefits

  • Provide a retirement program with relatively little administrative burden.
  • Greater flexibility in plan design than is available for qualified plans.
  • Nondiscrimination rules applicable to qualified retirement plans do not apply to 457 plans.
  • Attract and retain quality employees.
  • Improved employee morale, productivity and employer/employee relations.

Employee Benefits

  • Save for retirement with pre-tax dollars.
  • Earnings are tax deferred until withdrawn.
  • Contribution limits are greater than IRAs.
  • Salary deduction offers a convenient way to invest consistently over time.

What is a 401(a) Employer Contribution Plan?
A 401(a) employer contribution plan is a defined-contribution plan available to public education institutions that allows the employer to make matching or discretionary contributions to employees.

401(a) Employer Contribution Plan Benefits

  • No annual IRS Form 5500 filing.
  • No annual nondiscrimination testing or reporting.
  • Discretion by the employer as to the type of employee eligible to receive a contribution.
  • Discretion by the employer as to the amount and payment schedule of the employer contribution.

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