Live Your Dreams
More than ever before Americans are living longer, healthier lives. Many
of us look forward to when we will be able to retire and enjoy life to its
The most important key to a comfortable retirement is planning. Planning
for your financial future can help ensure that you will be able to meet all of
your retirement needs. A 403(b) tax-deferred annuity is one way to a well-
Save Money Now
You save money each paycheck starting immediately by enrolling in your
District’s 403(b) Plan.
Get Paid Later
When you receive your money at retirement you may be in a lower tax
bracket, allowing you to pay less in taxes on your monthly distribution.
Your funds are distributed back to you as a supplemental income to your Social Security and State Retirement
Plan. A 403(b) plan does not affect your monthly benefits from other retirement plans or Social Security.
Control Your Future
With a 403(b), you have options! You may stop contributions or change the amount of your deferral as allowed by your employer.
Begin Your Plan Easily
When you enroll in a 403(b) your contributions will be deducted before taxes from your paycheck. A simple form is all you need to complete
in order to participate.
WHAT IS A 403(B) PLAN? IS THERE A LIMIT TO THE AMOUNT I CAN PAY TO
The Internal Revenue Code section 403(b) allows you to defer
a portion of your taxable income for retirement purposes. It is MY 403(b)?
specifically for the faculty and employees of universities, colleges, Tax laws limit the maximum payment which can be excluded from
public school systems, and certain non-profit organizations. your taxable income to $16,500. This amount may be more or
less, depending on your past years of service with your employer,
An American Fidelity annuity may be selected to fund your 403(b) amounts previously contributed, and other employer contributions
Plan. An annuity offers you many options upon retirement such as a to retirement plans. If you are age 50 or older, you may contribute
guaranteed lifetime income. This is a special advantage of an annuity an additional $5,500. You may begin taking advantage of this
when compared to other methods of saving. The funds accumulated increased limit in the tax year you attain age 50. Your American
in the Plan can be used at retirement to provide monthly annuity Fidelity representative can assist you in calculating your maximum
payments, which you cannot outlive. contribution amount.
WHAT IS THE TAX BENEFIT TO ME? WHEN CAN THE MONEY BE WITHDRAWN?
Contributions to the Plan are deferred for federal and, in most This money is intended to be used at retirement, however it may be
cases, state income tax purposes. As a member of the educational withdrawn under the following conditions:
community, you have a great opportunity to save money with ■ Attainment of age 59½
before tax dollars since “after tax” plans do not offer the same tax
■ Your Death or Disability
■ Separation from Service
HOW DOES THE TAX BENEFIT WORK? ■ Severe Financial Hardship
Under a salary reduction agreement with your employer, your pay Withdrawals due to hardship, if allowed under the Plan rules,
will be reduced by the amount you elect for your 403(b) account. will be limited to your contributions only. Unpaid medical or
Your salary is reduced by the amount you volunteer to pay into the education expenses, purchase of a home or amount needed to
program; you pay federal income tax only on the remaining portion! prevent foreclosure or eviction of principle residence, death of an
immediate family member, and qualified tax deductible repairs to
the participant’s primary residence may qualify you for a hardship
withdrawal. Because of the lost tax advantages and the penalty tax,
you would want to avoid withdrawals if at all possible.
If you do withdraw money before age 59½, a 10% tax penalty will
be incurred in most situations.
CAN I BORROW ON MY ACCOUNT? WHAT ARE MY OPTIONS AT RETIREMENT?
If the Plan allows for loans and depending on the 403(b) vehicle you ■ Option A – Lump Sum
choose, there may be a loan provision available. Many of American Receive your money in a lump sum. You will probably realize
Fidelity’s annuity products do offer loan opportunities. a greater tax advantage, though, if you elect a periodic payment
WHAT HAPPENS TO MY MONEY AFTER I ENROLL? ■ Option B – Life Only
Your money is contributed into an annuity that you choose. 403(b) Receive monthly payments for life. You cannot outlive these
plans offer a variety of choices including fixed and variable payments. They terminate only at your death no matter how long
annuities. You choose the annuity that’s best for you! you live.
■ Option C – Life with 10 Years Certain
HOW DO I CHOOSE THE RIGHT OPTION FOR MY Receive a life annuity to you or your named beneficiary with
MONEY? 120 months certain. This option provides you with monthly
payments for as long as you live. If, at your death, payments
Your American Fidelity Representative can explain the options
have been made for fewer than 120 months, you have the
available for you. Each person’s plan varies depending on his or her
assurance that payments will be continued to your beneficiary
age, personal and family needs, and risk tolerance.
for the remainder of the 120 months.
■ Option D – Period Certain
Receive payments for a Period Certain (an agreed upon amount
of time). Other options may be available. American Fidelity, for
example, will work with you to set up the payment plan that best
meets your retirement needs.
Cost of Waiting
Consider the cost of waiting to activate your savings plan. This illustration describes just how much it can cost you. In scenario one, you 4
invest $2,000 at the beginning of each year for twelve (12) years. In scenario two, the same investment program is started twelve years later,
but continues for 31 years.
Note the difference in the total value of the investment at age 65. In scenario one, the investment is $38,000 less than the investment in
scenario two. Yet, the total value of the investment is $3,091 more than the value in scenario two.
THE BENEFIT OF
34 Age 65
AGE 22 AGE 34
■ $2,000 per year for 12 years to age 34 ■ $2,000 per year for 31 years to age 65
■ $24,000 total invested ■ $62,000 total invested
■ 5% assumed annual rate of return ■ 5% assumed annual rate of return
■ At age 65, investment grows to $151,688 ■ At age 65, investment grows to $148,597
or wait and start at age 34...
This is a hypothetical example that does not represent the performance of any investment product. The rates of return will vary depending on the investment options selected.
Growth, if any, is tax-deferred until withdrawn.
The Company Behind Your Plan
American Fidelity Assurance Company is a third-generation, family-owned organization providing
insurance products and financial services to education employees, trade association members and
companies throughout the United States and across the globe.
Since 1982, American Fidelity has been rated “A+” (Superior)1 by A.M. Best Company. Considered
one of the nation’s leading insurance company rating services, A.M. Best bases its ratings on an
analysis of the financial condition and operating performance of insurance companies in such vital
areas as: Competency of Underwriting, Control of Expenses, Adequacy of Reserves, Soundness of
Investments and Capital Sufficiency.
Because of American Fidelity’s fiscal strength and financial security, the company has been rated
“A” (Excellent)2 with TheStreet.com, Inc (formerly Weiss Ratings, Inc.). This places American
Fidelity on the list of TheStreet.com’s Recommended Companies, an elite group of life, health and
annuity companies. American Fidelity’s rating represents the top 2.8 percent of insurance companies.
The 2008 Standard and Poor’s Insurance Rating Report has given American Fidelity an “Api”3
rating. The qualified solvency ratings assigned by S&P are based on the analysis of quantitative data
such as Capital Strength, Quality of Assets, Profitability and Liquidity.
American Fidelity Assurance Company is proud to count itself among Fortune4 magazine’s “100
Best Companies to Work For” in America for the sixth straight year. We know that satisfied
employees result in satisfied customers, which is an important foundation of American Fidelity’s
approach to business.
American Fidelity is founded on and driven by the principle of serving our customers. We continue
to grow steadily through calculated growth and conservative investment practices.
www.ambest.com, February 21, 2008 (A+ is the 2nd out of 16 with 1 being the highest.)
TheStreet.com Ratings’ Guide to Life, Health and Annuity Insurers, Winter 2008 - 09 (A is the 2nd out of 16 with 1 being
www.standardandpoors.com February, 2009 (Api is 9th out of 24 with 1 being the highest.)
Fortune Magazine, February 2, 2009 Issue
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