Aldine ISD 457(b) Savings for Retirement Plan
Plan Description

The Aldine Independent School District 457 Savings for Retirement Plan is a voluntary savings plan designed to allow employees to defer a portion of their compensation through payroll deductions. These deferrals are made on a pre-tax basis and allow employees the opportunity to save for retirement. The Aldine Independent School District 457 Savings for Retirement Plan is an attractive alternative to traditional 403(b) “tax sheltered annuity” programs.

The Aldine Independent School District 457 Savings for Retirement Plan is set up under Section 457(b) of the Internal Revenue Code. The Plan works for the most part like a 401(k) plan.

·         Employees complete forms to enroll in the plan without the need to meet with a sales person.

·         Educational meetings are offered to the District by salaried representatives of the companies providing the plan services. No commissions are paid to any individuals or companies from the plan.

As a result of changes in tax laws effective January 1, 2002, 457(b) plans now have the same features and advantages of 403(b) and 401(k) plans. However, funds paid out of a 457(b) plan are not subject to an early withdrawal excise tax (unlike 403(b), IRAs or 401(k) plans). Listed below are some of the additional advantages and features of our new plan:

1. Contribution Limits

Contribution limits are independent of other plan limits such as 403(b) contribution amounts. (This means that you can now contribute the maximum amounts to both a 403(b) plan and a 457 plan.)

2. Distributions:

Distributions are available upon termination of employment, death, disability, retirement or certain types of unforeseen emergencies. Distributions can be:

• Rolled to an IRA, 403(b) 401(k) or another 457(b) plan that accepts rollovers,

• Used to buy TRS service, or

• Taken as a cash distribution (subject to applicable federal and state income tax).

3. Investments:

The plan will offer participants the choice to select their own investments or the choice of selecting one of three professionally managed portfolios. For those participants who choose to manage their own investments, the Plan offers a wide selection of high quality no-load and load-waived mutual funds.  For participants who choose to have their funds professionally managed, the Plan offers three professionally managed portfolios suitable for investors with an investment horizon of five years or greater. Management will include quarterly re-evaluation of the investment portfolio, periodic rebalancing of the portfolio and other professional investment management services.

4. Penalties:

There is no 10% excise tax on distributions – not true of 403(b), IRA or 401(k) plans. In addition, the plan being offered by the District has no surrender charges, withdrawal penalties or other restrictions/penalties. This is not true of many 403(b) programs.

5. Loans:

Loans against an employee’s account balance are available under this Plan.

6. Taxation:

Distributions are taxed as income at the time the funds are received as cash. Taxation of principal and interest can be deferred until the participant reaches age 70½, at which time the individual must begin receiving minimum required distributions as defined by IRS regulations.

7. Company Offering Services:

The company chosen to provide the 457 Savings for Retirement Plan is PARS, a company with many years of proven expertise in administering retirement plans to public sector employees.  Services are also provided by the Trustee, Union Bank of California, and investments are offered through the Custodian, Charles Schwab.  TCG Advisors, LP is the investment advisor to the Plan.

8. Protection from Liability:

Your District as a plan sponsor is a fiduciary with a 457 plan and is responsible for the types of investments offered to participants. Most 457 plans do not protect the District from fiduciary liability. The Aldine Independent School District offers fiduciary protection for the District through an Investment Advisory Agreement with TCG Investment Advisory Services LP.

To get more information about the Plan or enrolling in the Plan,
please contact PARS at 866-708-3777.