Issue link: http://educator.cta.org/i/812811
Resources • Explore the basics of 403(b)s: CTAinvest.org/home/403b-457-Plans.aspx • CTA Retirement Savings Plan, a best-in- class plan developed for CTA members: CTAMemberBenefits.org/rsp • CTA's Savings, Investment and Retirement website, with everything you need to know, including the latest information, tools and resources: CTAinvest.org Savvy Planning Employees of public schools, universities, nonprofits and religious organizations can save for retirement with 403(b) plans, which supplement your CalSTRS or CalPERS pension. Some CTA members who are state and government employees are eligible for a 457 plan, similar to a 403(b) plan. What are 403(b) and 457 plans? A 403(b) plan is similar to a 401(k) plan in the private sector. However, 403(b) plans are exempt from ERISA, the Employee Retirement Income Security Act of 1974, which more stringently regulates 401(k)s. Government 403(b) plans, including public schools, are covered by state laws or less rigid federal securities regulations. A 457 plan is similar to a 403(b) plan, but is intended for state and government employees. Why Do I Need a 403(b) Plan? Your pension will not replace 100 percent of your pre- retirement income. On average, CalSTRS replaces 50 to 60 percent of pre- retirement income. CalPERS replaces, on average, 30 to 39 percent of pre- retirement income, but its members earn Social Security. To close the gap, you will need to contribute money to a supplemental savings plan such as a 403(b) or 457 plan. What are the tax benefits of 403(b)s and 457 plans? The money you contribute to a traditional 403(b) or 457 plan is subtracted from your paycheck before federal and state income taxes are deducted. Example: If you are in the 25 percent federal tax bracket and 8 percent California income tax bracket and contribute $100 in a pay period, that doesn't reduce your take- home pay by $100. Instead, the $100 contributed to your account could reduce your take-home pay by just $67. What is CTA's 403(b) Retirement Savings Plan? Introduced in 2016 after several years in development, the CTA Retirement Savings Plan was designed with our members in mind, to help them save money and be better prepared for retirement. The plan offers high-quality investment options, low fees, complete transparency and no conflicts of interest. Does my district offer the CTA Retirement Savings Plan? Before you can participate in the plan, the CTA Retirement Savings Plan must be added to your district's list of approved vendors. You can check on that at CTA Member Benefits' website at CTAMemberBenefits.org/rsp, by logging on to the CTA Retirement Plan Center website at CTARetirementPlan.org, or by calling the CTA Retirement Plan Center toll-free at 855-604-6222. retirement. She has learned that on average, CalSTRS members (retiring at age 62 after more than 25 years of service) receive a pension benefit that replaces between 50 and 60 percent of their final salary. CTA members in the CalPERS system receive 30 to 39 percent of their final salary, although, unlike the majority of CalSTRS mem- bers, they also receive Social Security benefits. Most financial experts suggest you'll need at least 80 percent of your pre-retirement income in retirement. " We want to make sure our members have a digni- fied, financially secure retirement," says CTA President Eric Heins. "But they can't do it with their pension alone. at's why we created a best-in-class plan with high-quality investment options, very low fees, complete transparency and no conflicts of interest." ere's a reason Heins proudly promotes CTA's Retire- ment Savings Plan. It took several years to develop and had to overcome numerous obstacles by companies, agencies and vendors threatened by the lower fees, transparency and high-quality investment options. John Haschak, an elementary school teacher and pres- ident of the Willits Teachers Association, was the first to sign up for the CTA plan last year, and his wife was second. Having had a lunchroom experience similar to Brye-Jones', Haschak was so ready to sign up for the plan after learning about it in a CTA retirement workshop. "It's a totally great thing for our members," Haschak says. "A lot of our members don't know about investing and don't want to have to check their investments on a daily basis. I check on it once in a while, but I don't have to be vigilant. I think it's really one of the great services CTA is doing." 49 April 2017