403(b)(7)
Custodial Account
A Custodial 403(b)(7) account allows
employee participants to
transfer their 403(b) assets and invest
in one or more mutual
funds, which may provide more investment
choices than other
403(b) accounts.
This allows you the flexibility to invest
as conservatively or as
aggressively as you like.
The contributions that you make to the plan
are deducted by
your employer directly from your paycheck through
an
automatic salary deduction feature, making it easier for
you
to put funds aside for the future. All earnings on the
contributions
are tax-deferred and are not taxed as long as
they remain in the account.
Apply
Application
Salary Deduction Agreement
Who’s it for?
A 403(b)(7) may be right for:
- Clients (generally teachers,
government workers or employees
of qualified
non-profit organizations) with an existing 403(b)
account.
- Clients who wish to transfer
403(b) assets so that they can be
invested into
mutual funds.
Establishing a Plan
Minimum to Transfer
$1,000
Eligibility
Anyone who has an existing 403(b) account funded only
by salary deferrals, with no employer contributions.
Use the 403(b)(7)
Tax Advantages
Earnings
Tax-deferred (taxed when you withdraw them). The tax-deferred
compounding effect of the earnings on your plan
assets can provide you with a substantial benefit.
Since the amounts you contribute
under a 403(b)(7) plan are taken out of your gross
pay, your federal income tax liability is reduced.
Many states also allow you to exclude
your 403(b)(7) contributions from your income when
determining your state tax liability, providing you
with even greater tax savings.
Withdrawals
Taxable
Contributions
Contribution Amounts
After your initial transfer, subsequent transfers from
another 403(b) account can be made at any time
as long as the transfer amount meets the $1,000
minimum requirement. You may continue to make elective
deferrals into your original 403(b) and then transfer
those funds to your Midas Funds 403(b)(7) account
when you meet the minimum transfer amount requirement.
Withdrawals
Penalty-Free
Withdrawals after age 59½
Penalty
If you
do not start Required Minimum Distribution (RMD)
withdrawals by age 70½ , you will face a 50%
penalty unless all or a portion of your account is
exempt.
Withdrawals before age 59½ are
subject to a 10% penalty. (Exceptions are listed
below.)
Exceptions to Penalty
Rollover
of distribution to another plan or IRA.
Withdrawals made
in equal installments over your
life expectancy.
Termination of employment at
or after age 55
Death or disability
Non-reimbursed medical expenses exceeding
7.5% of adjusted gross income
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