Participating in a tax-deferred voluntary savings plan is a great way to build your retirement savings and reduce current taxes.
All employees who receive a W2 from SUNY are eligible to participate in the SUNY Voluntary Savings Programs.
These programs allow employees to have money deducted from their paychecks on a pre-tax basis to help supplement their post-retirement income from Social Security, employer sponsored pension plans, and personal savings.
Your contributions, plus earnings, are not taxed until you withdraw the funds, allowing for even greater savings through tax-deferred growth. Usually this will be during your retirement, when your income may fall within a lower tax bracket.
There are two different types of voluntary savings plans available to SUNY employees, each type being authorized under a different section of IRS Code.
Both plans function similarly, but there are a few important key differences between the two different plan types that you should be aware. The following chart provides additional information about each plan so that you can see how the plans function, and how they differ.
For 2016, you may contribute up to $18,000 per year to either a 403(b) or a 457(b) account, or to both.
Because 403(b) and 457(b) plans are governed by different sections of IRS Code, employees may contribute to both plans concurrently, allowing a combined deferral maximum of up to $36,000 per year.
Contributions to all 403(b) and 457(b) plans are combined, so if you use multiple Investment Providers, or are also a participant in a 403(b) or 457(b) plan of another employer, your combined contributions cannot exceed the IRS limit for each plan type. If you do participate in more than one of each type of plan, you are responsible for tracking and reporting the amount of all of your contributions to the plans so that the total amount of all your contributions to all plans in which you participate do not exceed the IRS limit. Note also that the sum of all of your contributions, and those of your employers, to all 403(b) and 457 plans that you participate in are generally limited to the lesser of $53,000 or 100% of your annual compensation.
If you are age 50 or older any time during 2016, you can contribute an additional $6,000 to either type of plan, for a maximum of $24,000 per year.
403(b) plans also allow employees with 15 consecutive years or more of service with the same employer to contribute up to an additional $3,000 per year ($15,000 max lifetime). Prior year contributions may limit this amount. Employees are eligible for both age 50 and 15 year catch-up contributions in the same year.
457(b) plans also allow those within three years of the plan’s normal retirement age (55), to contribute an additional amount of up to the lesser of twice the applicable limit or unused amounts from prior years. Employees are eligible for the greater of the enhanced limit or the age 50 catch-up provision, but may not do both in the same year.
For more information about retirement plan contribution limits, please see the complete list of 2016 COLA Limits .
You can learn more about the Voluntary Savings Plan options available to you by visiting the following links:
You can enroll in a Voluntary Savings Plan as detailed below. Once enrolled, you can review and change the amount of your contributions as often as once per pay period via the same processes as enrollment. The exact date your investment allocations will take effect may vary depending upon the policies of the Investment Provider managing the investment options you chose for Plan contributions.
* A variable annuity contract is a hybrid investment containing both securities and insurance features. The securities feature of variable annuities provides investors with the opportunity to participate in potential capital appreciation and income through investments in the securities markets. These securities features will, however, subject the investor to market risks. The insurance features of variable annuities permit employees to "annuitize" their contracts, electing to receive a lifetime income option so that they are guaranteed a stream of income payments that they cannot outlive, much as with a pension from ERS or TRS. In exchange for this lifetime income option, however, variable annuities have an extra set of fees, known as Mortality and Expense (M&E) charges that given them higher annual operating expenses than mutual funds. Many annuities are actually funded by underlying mutual funds, which are "wrapped" into an annuity product to give employees access to a broader range of funds while still preserving the lifetime income option protection that annuities afford.
Contributions made to a 403(b)(1) tax-deferred variable annuity may generally not be withdrawn prior to your death, disability, attainment of age 59-1/2, severance from employment or financial hardship. These restrictions do not include contract exchanges to other investment alternatives under SUNY's 403(b) plan. More specific information is available from your investment provider(s).
** A mutual fund is a financial intermediary that allows a group of investors with predetermined investment objectives to pool their money together. By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they could achieve on their own. Mutual funds have fund managers who are responsible for investing the pooled money into specific securities (usually stocks or bonds). When employees invest in mutual funds they are buying shares of these funds, becoming a shareholder of funds in which they invest. Mutual funds are very cost efficient and a very easy way for employees to invest in since they do not have to figure out which stocks or bonds to buy. Mutual funds also allow an individual investor to achieve much greater diversification than they ever could through the purchase of individual stocks or bonds.
Please note that this information has been prepared as a general summary of the benefits available to SUNY employees. It cannot provide you with the complete details on all benefits related matters. You should carefully review and research the options available to you before making any enrollment decisions. Only authorized representatives from each plan administrator or benefit plan provider are adequately knowledgeable and experienced to fully address your questions or to assist you with many of the technical aspects of their respective programs. The information contained in all SUNY publications and web sites is intended only as a basic summary overview and to provide you with basic points for your consideration. You are invited to contact representatives from the benefit plan in which you are interested for additional information or with specific questions about their respective benefits or coverage.