Retirement and Tax-Sheltered Savings Accounts
Are you thinking about retiring?
Reaching your retirement goals requires planning to build your retirement resources. At DPS, we want to help you prepare for the future.
If you are considering retirement, you may want to take a look at our Retirement Checklist.
DPS offers several ways to assist you in saving toward your retirement. Colorado PERA provides retirement and other benefits to DPS employees. As a traditional pension plan, Colorado PERA provides members and retirees with a comprehensive benefit package. For more information, visit Colorado PERA, view Your PERA Benefits, or contact PERA Customer Service at 303-832-9550, or 1-800-759-7372.
In addition, DPS offers tax-deferred programs in which you can contribute a portion of your salary toward your retirement. Contributions into these plans do not reduce the calculation of PERA salary or your Highest Average Salary.
How can I contribute toward my retirement?
You can specify the amount that you’d like deducted from your pre-tax income, and DPS will send it to the tax-deferred provider for you.
- The IRS allows you to contribute up to a maximum of $18,500 per year.
- If you’re over the age of 50 (or you’ll turn 50 this year), you can contribute an additional $6,000 to your plan.
- As a DPS employee, you’re eligible to enroll in a 403(b), or the 401(k) and the 457(b) plan to save twice the amount of the IRS limit.
- If you enroll in both the 403(b) and the 401(k) plans, it’s your responsibility to make sure that your total annual contribution doesn’t exceed the maximum amount allowed by the IRS.
- Contributions into these plans do not reduce the calculation of PERA salary or the Highest Average Salary.
What are 403(b) and 457 plans? Why should I participate?
These plans offer employees the opportunity to save additional pre-tax contributions for retirement. Not every employee will work at DPS long enough to retire under PERA. In addition, PERA is not designed to replace your full pre-retirement income and you may want to save additional money for retirement.
Both 403(b) and 457 plans are voluntary defined contribution retirement plans available to employees at DPS. While all employees are automatically members of PERA and contribute a fixed percentage of their salary to PERA, participating in a 403(b) or 457 plan is completely voluntary. In addition to choosing whether or not to participate, you also decide exactly how much you want to contribute and you can change the amount at any time. If you would like to enroll now, click here.
What are the benefits of 403(b) or 457 voluntary defined contribution retirement plans?
- Portable benefits: This means that your account is always 100% yours and goes with you even if you leave DPS. We know that most employees do not spend their entire career with one employer so portability is a huge benefit.
- Personal preference: You make the decisions about what funds to invest in, how much to invest, and when to make changes based on your personal financial needs.
- Loans and other types of withdrawals: You are able to access your account funds without a tax impact before retirement under certain circumstances.
- Tax benefits: You can contribute to these plans on a pre-tax basis and your contributions accumulate tax deferred. This means you will only pay taxes on the contribution when you take funds out of your account.
- Roth Option: You can contribute to the Roth option, which is after tax. This means when you take funds out of your account in retirement, they are tax-free.
Why is DPS moving to a sole vendor?
The improvements are designed to strengthen the voluntary retirement plans and help DPS employees pursue their retirement goals more effectively and with lower costs.
DPS currently has ten vendors offering more than one thousand investment options. We have heard from DPS team members that they don’t understand their vendor or investment options or the fees associated with each 403(b) Plan choice and that creates confusion for them. In addition, through this multi-vendor approach employees are targeted by multiple sales people trying to sell them products, rather than retirement focused education.
The DPS Benefits Board, comprised of District and employee association members, determined that consolidating the plans under a single vendor will significantly improve this situation. Benefits include:
- Simplified retirement planning for employees: One website, one phone number, one statement to review and one firm offering more retirement education services.
- Lower fees and improved services to employees: Consolidating vendors and assets allows us to increase our bargaining power to negotiate better terms. Fees associated with the retirement plans, administrative and investment related, will be clearly stated.
- Focus on education and planning: Two dedicated VALIC education representatives will focus on the individual needs of each participant.
- New, streamlined investment menu: The opportunity to invest in a highly rated, diverse menu of funds from different investment managers, enabling participants to select investments based on their individual risk profile and financial goals.
When do the changes take place?
The new plan goes into effect on July 1, 2018. The last payroll deduction to legacy vendors was June 30, 2018.
Why was VALIC chosen as the sole vendor?
The Benefits Board engaged in a rigorous benchmarking and Request for Proposal process and selected VALIC because they have:
- Specialized in the retirement business for more than 50 years and are a leading provider of educational and investment services to K-12 districts, and extensive experience in vendor consolidations.
- An excellent reputation and ability to administer the plan in accordance with plan rules and regulations.
- The ability to provide onsite retirement planning and counseling services using highly-qualified local education representatives dedicated to DPS.
- All VALIC representatives function as fiduciaries on your behalf when providing advice.
- Competitive fees.
- An easy-to-use website and other participant education tools and materials.
How much can I contribute to a 403(b) or 457 plan?
You can contribute up to $18,500 per year (or $24,500 if you are over the age of 50) to either or both of these plans. The contribution limits are separate for each plan. There are small differences between the 403(b) and 457 plans. Your VALIC representative or personal financial advisor can help you determine which plan to choose.
What can I invest in?
The Benefits Board and their advisors have selected a highly rated diverse menu of investment options, which include Vanguard, T.Rowe Price, Oakmark, and Dodge &Cox funds to name a few. Your VALIC representative can help you select investment options that best suit your retirement objectives.
Was my current 403(b) account balance automatically transferred to the new plan?
If you had a 403(b) account with VALIC, your assets automatically transfered into the new investment menu based on your allocations as of June 10, 2018.
If you had a 403(b) account with a vendor other than VALIC, your current account balance is your personal property (an individual contract) and cannot be automatically transferred. Please meet with a VALIC financial advisor (or representative) to assist you in understanding the suitability of making a transfer.
Does DPS charge an administration fee?
DPS charges a $0.50 per paycheck administration fee for all team members enrolled in the 401(k) plan with PERA and the 403(b) and 457(b) plans with VALIC. This fee covers the cost of an external retirement consultant to ensure our plans meet all federal guidelines and to ensure a high-performing investment line up.
What happens to my current account with a non-VALIC 403(b) vendor?
If you have an account with another vendor other than VALIC, you have the following options:
- You can choose to keep your investments with the current vendor but you will not be able to contribute any new money through payroll deductions after July 1, 2018.
- You can choose to transfer your existing plan assets to the new funds available at VALIC. Please talk to your VALIC representative to determine the process as well as any contract or account restrictions that may exist with your current vendor.
- Your future contributions after July 1, 2018, will be sent to VALIC and can be directed to any options in the new mutual fund investment lineup. If you don’t make a selection, your contributions will be invested in the age-appropriate target date fund.
What happens to my current 457 account with Empower Retirement?
If you had a 457 account with Empower Retirement, your assets, with the exception of the Key Guaranteed Portfolio Fund, were automatically transferred to your new 457 account at VALIC based on your allocations as of June 10, 2018. More information will be forthcoming on the Key Guaranteed Portfolio Fund transfer.
What if I have an outstanding loan on my 403(b) account?
If you currently have a loan on your account at VALIC, your loan balances cannot be transferred in your new 403(b) account. After the loan is paid off you will have the option to transfer funds into the new 403(b) plan.
I am about to retire / am currently retired from DPS. How does this change impact me?
We encourage you to schedule an individual consultation to receive guidance on the best strategy for your individual circumstance. Appointments are held in person or by phone. You can contact your VALIC representative Mallory Guido at Mallory.Guido@valic.com to schedule a meeting.
How can I learn more?
Educational sessions will be held during March and April. Please check back to thecommons.dpsk12.org/403b or see employee newsletters for details. In addition, you can contact your VALIC representative at Mallory.Guido@valic.com to schedule a confidential, personal meeting. If you prefer to discuss your situation over the phone, please call 866-899-3512. Meetings are scheduled at a time convenient for you and your spouse or partner.