Tax-Deferred Plans Offer New Option for 2006

[roth401k]

Tax-Deferred Plans Offer New Option for 2006

By Paula M. Singer and Jeri E. Hurley, The Singer Group, Inc.
http://www.singergrp.com/paula.htm

Most employers are rightly focusing on benefits these days, particularly health benefits, as the costs for plans continue to increase by double-digit percentages. It is important that libraries, while thinking about the entire benefits package offered to employees, don't forget to spend some time thinking about pension plans. Many public-sector library employees are able to join a state-provided pension plan. In addition, library systems qualify for 403(b) plans – a taxdeferred plan defined by Section 403(b) of the Internal Revenue Code. 403(b) plans are retirement savings plans in which employees of certain tax-exempt organizations can participate. A qualified employer, in the eyes of the IRS, is an organization that is “organized and operated exclusively for religious, charitable, scientific, public-safety testing, literary, or educational purposes.” Libraries qualify to offer these plans under this definition.

Under 403(b) plans, contributions can be invested in tax-sheltered annuities issued by life insurance companies or taxsheltered custodial accounts that invest in mutual funds. The amount of pretax dollars that employees may contribute annually is limited by a rather complex formula.

In most cases, contributions to a 403(b) plan are made from employees' elective deferrals. The employee signs a salary reduction agreement with the employer authorizing the employer ........................


Bibliography
Employee Benefit News. "Many employees neglect workplace retirement guidance." BenefitNews Connect. March 15,
2005.

The Singer Group is a management consulting firm that helps smart organizations craft clear paths to their authentic
potential. Paula is the President and owne; Jeri is a consultant with the group. They can be reached at
pmsinger@singergrp.com and jhurley@singergrp.com.
Copyright 2004–2005 ALA-APA. Contact Jenifer Grady, 50 E. Huron, Chicago, IL 60611, 312-280-2424, jgrady@ala.org for more information.

http://www.ala-apa.org/