As mentioned above, code sections define the plan available to each employer. A 401(k) plan is a form of profit sharing plan designed for for-profit corporations. The rules are similar, but not the same. For example, in the case of public school plans you rarely see a matching employer contribution because districts already have a pension plan in the form of PERS or STRS to which they must contribute on behalf of employees.

For 2019, the regular limit is $19,000. For those over 50 years of age, an additional $6000 can be sheltered for a total of $25,000.

Definitely, but this feature is an “opt-in” for the basic plan document completed by the employer and TPA. Very few public schools have opted for this feature — perhaps because of additional fees or in the belief that employees aren’t interested. If this is a feature you want, speak up!

Historically, if a teacher wanted to send money to a company, as long as that company would hold the employer harmless in the event of a problem, then the district would often simply add that company to a long list. Now that districts are being held to a greater fiduciary standard a certain amount of due diligence is being performed. It’s not perfect, but hopefully it will improve with time as districts come to understand their responsibilities go beyond billing and collecting payroll deductions.

The Department of Labor (DOL) decided some years ago that unlike 401(k) plans, there was really no one “minding the store” in public school plans. For the most part, school districts were simply disinterested “check writers” remitting payroll deductions to as many as 100 or more different TSA companies. They implemented significant regulations to “police” this perceived lack of oversight.

The basic definition is someone who stands in a special relationship of trust, confidence, and/or legal responsibility.

In response to the above concerns, and of course to stay in compliance with the new rules, school districts hired TPAs, third party administrators, — to file annual forms, monitor plan offerings, and to develop and administer the plan. In some cases this has worked well, but in far too many it has resulted in significant erosion of investment alternatives and individual client service.

Simply, annuitizing means that you have sold your accumulation in exchange for a monthly income, for a specified period. That period could be as short as 13 months or as a long as a lifetime. The key is that you’ve given up control of your funds for the guarantee of an income stream. Be sure you carefully consider all your options, before deciding how to start receiving your accumulated savings. Annuitization is NOT the same thing as making partial cash withdrawals at a time and amount of your choosing.

A classic two tier account provides a different benefit amount depending on how the money will be used; quite often the cash surrender value entails a sizable surrender charge. A wise consumer needs to understand the difference between their cash surrender value and their accumulation value. If the accumulation has to be paid out in a series of monthly payments, it’s critical that the annuity factors be thoroughly understood, ideally before investing one’s money. There is a significant difference between a two tier annuity and one offering a lifetime income option with no requirement to annuitize.

The simplest difference is that a separate account is quite often nothing more than a mutual fund run by an insurance company inside an annuity framework. Because there may be multiple versions of this account based on product features and insurance company variations, it is quite often the case that specific details regarding pricing, fees, and other details are simply not as transparent as those of a mutual fund. Often, it will have the same managers but an altogether different fee structure.

“No load” simply means a mutual fund that is sold without a commission or a sales charge to the planner or broker, which is not the same as no management fees at all. Every fund has fees of one kind or another. It’s important to weigh those fees and a host of other factors when making investment decisions.

Think of fees and loads as weight – the more fees an investment carries, the slower the investment can run. Some fees are critical; for example, even the skinniest index fund or ETF has management expenses, administrative, and trading fees.

This is more of a plan administrator question. Bundled simply means all the fees and expenses are carried within the product. Unbundled is a little like ordering a la carte at a restaurant – it’s more transparent, but not necessarily cheaper.

The short answer is that if your taxes were squared away before contributing to a TSA, they’ll still be squared away afterward. If you had a refund or amount due before the TSA, all things being equal, it will happen again. Bear in mind that the TSA is not so much deductible as “not-includible”. The deduction happens at the employer level, net of most employer deductions, but before state and federal withholding taxes. Because the reduction and tax withholding is always proportional, contribution levels are not the place to fiddle with tax withholding issues.