PHOENIX, Ariz. – Capital Choice Arizona has published a free online resource for Phoenix teachers, city and county staff, hospital workers, and anyone who puts money into a 403(b) or 457 plan. The page covers plan costs, surrender charges, and how the accounts fit with an Arizona State Retirement System pension.
The timing is deliberate. Arizona schools open earlier than almost anywhere else. Chandler Unified started July 15. Most Phoenix districts opened the first week of August. Many staff signed a salary reduction agreement without seeing a fee schedule. Those agreements can be changed in the year.
Why 403(b) costs stay out of sight
Public school 403(b) plans are usually exempt from ERISA. That federal law sets standards for most private sector 401(k) plans. It doesn’t cover these plans. Districts run the paperwork. They are not required to check what the products on the vendor list cost.
The problem is documented. The nonprofit 403bwise project tracks K-12 plans nationwide. A New York Times series covered the same ground. Both found vendor lists full of insurance products. Both found surrender periods measured in years, not months.
“The vendor table shows up in the teachers’ lounge, somebody friendly hands you a form, and you sign because everyone signs. Nobody hands you the fee schedule. That’s the one page I want every educator to read before payroll takes a dollar, because two products on the same district list can differ by a full percentage point a year or more. And if you already signed, you are not stuck. A salary reduction agreement can be changed any month of the year, not just in August.”
– Chris Walsh, Regional Marketing Director and Senior Advisor, Capital Choice Arizona
The 457 advantage people miss
A governmental 457(b) plan has one benefit a 403(b) doesn’t. Once an employee leaves that employer, they can take money out without the usual 10 percent early withdrawal penalty. Income tax still applies.
A 457(b) also has its own limit. If an employee’s job offers both plans, they can fund each one in the same year.
The IRS set this year’s limit at $24,500. That applies to 403(b) plans, governmental 457(b) plans, and the Thrift Savings Plan used by federal employees and military families. Savers 50 and older can add $8,000. Those 60-63 can add $11,250 instead.
One rule is new. If an employee’s Social Security wages last year topped $150,000, the catch-up money has to go in as Roth dollars. That reaches district administrators and hospital staff more often than classroom teachers.
How the ASRS pension fits
Most Arizona educators and public workers belong to the Arizona State Retirement System. ASRS reports more than 650,000 members and more than 175,000 retirees. Members and employers split the rate evenly. It moved to 11.98 percent on July 1, down from 12.00 percent.
One Arizona detail gets left out of most national coverage. Arizona public school employees pay into Social Security. That coverage is a condition of ASRS membership. Teachers in Texas, California, Illinois, Ohio, and Massachusetts often have none. Advice written for those states does not apply here.
ASRS also reports the average benefit for a retiree with 20+ years of contributions. It runs about $1,700 a month. That number is why the third leg matters, and why retirement planning in Phoenix has to account for all three at once.
“ASRS itself says the pension was never meant to provide all of your retirement income. At about $1,700 a month for a twenty-year career, it is a strong leg, but it is one leg of three. Social Security is the second. The 403(b) or 457 you control is the third, and it is the only one where your own decisions set the outcome. Our job is making sure that third leg holds weight.”
– Bill Haight, Executive Marketing Director, Capital Choice Arizona
What the resource covers
The page shows how to read a plan fee schedule and check for surrender charges. It explains how to use a 403(b) and 457 together and how both fit with an ASRS pension and Social Security.
Capital Choice Arizona can manage a 403(b), 457, or TSP account while the money stays in the employer plan. No rollover is required.
Phoenix educators and public workers can read the guidance at https://capitalchoiceaz.com/retirement-planning-phoenix/403b-457-planning-phoenix/ or call Capital Choice Arizona at (602) 396-2741 to schedule a review of plan costs, fund choices, and ASRS coordination.
About Capital Choice Arizona
Capital Choice Arizona is a veteran-owned advisory practice serving Phoenix households at 11022 N 28th Dr, Suite 170, Phoenix, AZ 85029. The team works with educators, city and county staff, hospital employees, federal workers, and military families. Advisors hold Series 65 registrations, and some advisors participate in the Dave Ramsey SmartVestor program. Meetings are available at the Phoenix office or by phone or video. Phone: (602) 396-2741. Web: capitalchoiceaz.com
Disclosures
Securities offered through CoreCap Investments, LLC, Member FINRA/SIPC. Advisory services offered through CoreCap Advisors, LLC, a registered investment advisor. Capital Choice is a separate entity and is not affiliated with CoreCap Investments, LLC or CoreCap Advisors, LLC.
This release is for educational purposes only. It is not individualized investment, tax, or legal advice, nor an offer to buy or sell any security. Contribution limits, tax rates, premium figures, and plan rules are current as of publication and subject to change. Consult a qualified tax professional about your situation.
Securities products are limited to residents of states where the representative is registered. SmartVestor is an advertising and referral service operated by Ramsey Solutions. Participating professionals pay a fee. Ramsey Solutions is not affiliated with Capital Choice, CoreCap Investments, LLC, or CoreCap Advisors, LLC, and does not supervise or endorse investment advice. SmartVestor participation does not assure investment success.
Email: cwalsh@capitalchoice.com
Media Contact
Name
Capital Choice Arizona
Contact name
Chris Walsh
Contact phone
(602) 396-2741
Contact address
11022 N 28th Dr Ste 170
City
Phoenix
State
AZ
Zip
85029
Country
United States
Url
https://capitalchoiceaz.com/
