Monday, May 19, 2008

403b RESOURCES FOR LEADERS

New 403(b) regulations require compliance by end of 2008

With the new IRS regulations taking full effect on January 1, 2009* local school districts need to set up their compliance mechanism during 2008 to protect the tax-favored status of 403(b) retirement accounts. There are resources available from the IRS, Association of School Business Officials, NEA, and other sources aimed at facilitating compliance and maximizing the value to members. Each school district must prepare a written plan that controls the district's 403(b) program.

Find out if any of the following will change because of the board’s compliance with the 403(b) regulations:

Choice of investment vehicles – It is important that the members have sufficient choices in selecting how they wish to invest their 403(b) funds. The selection process of the investment options needs to be carefully planned and performed so that it is objective and serves the best interests of members. Products should include low-cost mutual funds, retirement age target-date funds, and advisor-assisted products for members who wish to have face-to-face assistance. Roth 403(b) accounts are also permissible to allow for after-tax contributions that grow tax-free into retirement.

Administration of the plan – Some boards may use outside administrative services. Other boards may perform most administrative functions in-house. The Association of School Business Officials has resources and training meetings for business administrators that offer step-by-step assistance in complying with the new regulations. Association leaders should be concerned if one of the 403(b) providers performs the district's administrative services, placing that provider in a potentially, preferred position as the central recipient of information from all of the 403(b) providers in the district.

Plan options – There are optional characteristics (like loans, hardship withdrawals, catch-up provisions, and rollovers) that should be clearly identified and agreeable to the members. In order to maintain the existing 403(b) products, they must conform to the terms of the district's written plan.

Internet Resources - The following online resources contain details on the new regulations, compliance, and 403(b) plans in general:

NEA 403(b) Toolkit - http://www.neamb.com/savings/403btoolkit.jsp

NEA provides a comprehensive set of tools and resources that enable school employees and Association leaders to understand the new IRS regulations that govern 403(b) plans and their impact on interactions between the local Association and board of education.

Association of School Business Officials - http://www.asbointl.org/index.asp?bid=9709

ASBO provides detailed resources for school business officials in complying with IRS regulations governing 403(b) plans.

IRS site for Retirement Plans - http://www.irs.gov/retirement/sponsor/article/0,,id=155347,00.html

The IRS provides information on starting and maintaining a retirement plan, including what kinds of plans there are, how they work, and their benefits.

Supplemental Annuity Collective Trust - http://www.state.nj.us/treasury/pensions/fact35.htm

The Supplemental Annuity Collective Trust of New Jerses (SACT) is a voluntary investment program that provides retirement income separate from, and in addition to, your basic pension plan.

403(b) Wise - http://www.403bwise.com

This website was started by two teachers disappointed with the lack of unbiased 403(b) education, and the lack of quality low-fee investment choices offered by public school employers.

*School districts with 403(b) plans that are maintained pursuant to a collective bargaining agreement (in effect before July 26, 2007) have until the end of the agreement, or until July 26, 2010, whichever is earlier to comply with the new regulations.

Questions may be e-mailed to PLomonico@NJEA.org.

PEN BEN AGAIN!!!

PEN BEN AGAIN —Your retirement benefits under fire!!

It never ends….

First it was the threat of a constitutional amendment to require voter approval for state spending on things like construction of schools, roads, and bridges.

Then, a plan got floated for “countywide” collective bargaining.

Last week, the tuition tax credit/voucher bill passed the first hurdle in the Senate.

And now, NJEA is hearing rumblings from the Statehouse that we will likely be facing new attacks on public employee retirement benefits.

During Gov. Corzine’s town hall meetings on his toll hike plan, many speakers asked the Governor to make deeper cuts in budget and programs. And some policymakers are running with that.

A recent Star Ledger article says legislators are looking for ways to breathe life back into some proposals that never moved out of the Special Legislative Session.

We’ve got the scoop and here’s their plan:

Eliminating pension credit for part-time employees;
Increasing the salary threshold for PERS/TPAF eligibility to $15,000;
Changing the pension formula from N/55 back to N/60; and
Raising the retirement age from 60 to 62.

If that’s not enough, they’re also looking to put an end to:

Employer-sponsored health benefits for part-time public employees; and
Defined benefit retirement plans for all new hires.

Although most of these changes would impact new hires, we know that cuts in benefits for any of our members ultimately hurt us all. For one thing, tiering benefits creates morale problems and a hostile work environment.

What else would you expect when workers get different levels of compensation and benefits for doing the same work?

Besides that, these attacks come out of misplaced blame. There’s no doubt that New Jersey is facing a serious fiscal crisis. But we continued to uphold our end of the bargain by making our payments into the pension system. It’s not our fault that the State took a decade-long “pension holiday” from paying its fair share and is now paying the price for its own bad judgment!

Legislation is being drafted, and the Senate will move quickly when it is introduced.

That’s why we NEED you to contact members of the Senate Budget and Appropriations Committee, Senate President Dick Codey, and your local legislators. Send an email now! Go to NJEA's Cyberlobbying site, click “Take Action” under “PEN BEN AGAIN!” and follow the instructions.

And come to NJEA lobby days in Trenton and SPEAK OUT! We keep adding more days. Find one that works for you and go to town!

Monday, May 12, 2008

Cyberlobby News on S-1607

CYBERLOBBY NEWS on S-1607

Don't let it go further!

Corporate tax credit/voucher scheme moves out of
Senate committee!

Despite all our efforts, it’s passed the first hurdle, folks! Legislation to give corporations dollar-for-dollar tax credits when they give “scholarship” money for tuitions to private and religious schools passed the Senate Economic Growth Committee on May 8.

The bill, S-1607 would make available $360 million for these “scholarships” in eight pilot districts: Camden, Elizabeth, Jersey City, Lakewood, Newark, Orange, Paterson, and Trenton.

Next stop: the Senate Budget and Appropriations Committee. That could happen as early as May 19, although the bill is not yet scheduled for a hearing there.

This legislation would drain approximately $360 million from the State Treasury at a time when the State faces a multi-billion deficit. And those contributions would cost corporations nothing, since they would receive a dollar-for-dollar tax credit on their state taxes.

This doesn’t make sense, we know. It’s unacceptable and irresponsible! And it’s a sneaky way to funnel public funds to private schools.

Don’t just sit there! Let your legislators know that this is unacceptable! Call them, email them, and come to lobby in Trenton.

Visit NJEA's cyberlobbying site, click Take Action under "School voucher bill advances," and follow the instructions to send an e-mail to members of the Senate Budget and Appropriations Committee and your state Senator.

Tell them that this backdoor voucher scheme is bad for New Jersey!

Don’t wait. There is no time to lose!