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403(b) Deferred Compensation Plan for Department of Education Employees
Administered by MetLife Resources
The City of Waterbury is pleased to offer its Department of Education employees an opportunity to participate in its 403(b) plan (the “403(b) Plan”). The 403(b) Deferred Compensation Plan is administered and overseen by MetLife Resources and if you work 1,000 or more hours per year, is available for you to participate in on a voluntary basis. There is no employer match in this plan. A 403(b) Plan is designed to help you save for your retirement. The amounts you contribute to the 403(b) Plan may be contributed on a pre-tax or after-tax (“Roth”) basis.
Federal tax law sets an annual limit on the maximum amount you may contribute to your 403(b) retirement savings plan. You may change the amount of your contributions within the tax law and program limitations. The annual contribution limits for CY 2010 is $16,500, and if you are age 50 or older you can contribute an additional $5,500 per year. These amounts may change annually.
Since 403(b) Plans are designed as a source of retirement income there are restrictions on withdrawing funds and any earnings before you reach age 59 ½. A distribution may be taken from the program before age 59 ½ for the following reasons: (a) severance from employment; (b) financial hardship; (c) disability; (d) death; (e) the amount distributed is a “qualified reservist” distribution. A financial hardship (“Hardship Withdrawal”) is defined by the IRS as unreimbursed medical expenses of the participant or his/her spouse and dependents; down payment on primary residence; eviction or foreclosure on your primary residence; or tuition and fees for higher education needs, but only for the next 12 months. The participant must have no other resources available and certify that no other recourse is available to you, including the possibility of a loan. Hardship withdrawals are not exempt from the IRS 10% tax penalty. If you take a hardship withdrawal you are prohibited from contributing to the 403(b) Plan for the next six months. The IRS makes it tough to access money this way for a reason – they don’t want you use the 403(b) as a form of short term savings. For exact details on your situation it is recommended that you contact a tax professional before applying for a hardship withdrawal.
Loans are permitted from the 403(b) Plan. They are not subject to any tax or penalty. You may borrow up to one half of your account balance, as long as your loan doesn't’t exceed $50,000. Loans must be repaid monthly on a substantially level basis, within five years; or within 15 years for the purchase of a primary residence. Any loan not repaid within the specified timeframe will be considered in default. Defaulted loans are treated as a distribution from the 403(b) and may be subject to ordinary income taxes and a 10% Federal penalty tax if prior to age 59 ½.
To begin participating in the 403(b) Plan you must complete an application, a salary reduction agreement and a MetLife suitability form. Forms are available in the City’s Pension and Benefit Office on the 2nd floor of the Chase Municipal Building, or, if you are interested you may visit the MetLife website at www.mlr.metlife.com or contact a MetLife representative: Clinton Hyland or David Caraglior at 800-492-3553. For Clinton type extension 28111 and for David type extension 28054; or send an e-mail: firstname.lastname@example.org or email@example.com