Contributions

• Selecting a Contribution Rate Option
• When You Must Choose Your Contribution Rate Option
• How Much You May Contribute
• How to Select a Contribution Rate Option
• Limitations on Annual Contributions

Selecting a Contribution Rate Option

The member-financed defined contribution component of Plan 3 provides a tax-deferred investment program that you may access any time after you separate from employment. Early withdrawal (before age 59½) may have tax consequences. The amount of retirement income you generate from the defined contribution component depends on how much you contribute and how well the investment(s) you select do in the market. You have a choice in how much you contribute.

When You Must Choose Your Contribution Rate Option

If you become a Plan 3 member by transferring from Plan 2, you must select your contribution rate at the time you transfer. If you are a new member, or if you are a Plan 3 member who is changing employers, you have up to 90 days from the date you begin working in an eligible position to select a contribution rate option. If you do not select a rate option within 90 days, the law requires that Option A (5 percent of pay at all ages) be assigned automatically.

Note: For substitute teachers, you may select only one contribution rate per school year, regardless of the number of employers.

How Much You May Contribute

Contributions to your retirement plan are mandatory. Each contribution rate option is comprised of a base rate of 5%, plus an additional rate ranging from 0% to 10%. The Total Member Contribution Rate is the percentage that will be withheld from your gross pay and added to your defined contribution account.

Once your contribution rate option has been established, it can only be changed when you change employers or during contribution rate flexibility periods each January as permitted by the Internal Revenue Service (IRS).

There are six contribution rate options:

Note: The Employee Retirement Benefits Board (ERBB) can add new contribution rates at any time in the future. Even if new rates are added, the restrictions on changing contribution rates still applies.

Using the Take-Home Pay Estimator on this Web site will provide you with the net effect of how your take-home pay will be impacted considering the various contribution rates listed above.

How to Select a Contribution Rate Option

You must submit a completed Member Information Form to your employer that specifies your contribution rate. See the step-by-step enrollment instructions on this Web site.

Limitations on Annual Contributions

Under Internal Revenue Code, Plan 3 is a qualified 401(a) program. If you are participating in tax-deferred plans in addition to Plan 3, such as a tax-sheltered annuity (403(b)), be aware that your total tax-deferred contributions are limited based on your annual taxable income. Consult the IRS and/or a tax adviser for detailed information.