Brief Explanation:

Many of you participate in the district’s voluntary 403(b) Tax Sheltered Annuity (TSA) Program. The district is pleased to be able to offer this voluntary program to all employees. This program allows you to defer current income taxes to your post retirement years, while accumulating additional savings for retirement.

The Internal Revenue Service (IRS) has begun actively auditing 403(b) TSA plans in school districts and county offices in California. As a result, many plans have been reported as not being in compliance with federal, and in some situations, state statutes. Contributions being made in excess of eligible limits can have an adverse effect on both employers, and on you, as a participant in the plan. For this reason, the district has conducted a compliance review, and we are now undertaking steps to insure that the district’s 403(b) plan is being operated correctly.

This notification is sent to inform you of the first step the district will take to implement our compliance initiative, and our effort to communicate the steps we must take to be sure that our 403(b) plan conforms with the statutes.

Trust Services of America has been selected by the district as the 403(b) TSA Program compliance administrator to assist the district in meeting IRS guidelines. One of the key items in the compliance process is the calculation of the 403(b) Maximum Annual Contribution (MAC), which is used to determine the IRS contribution limit for each employee contributing to a 403(b) TSA.

If you are presently a 403(b) program participant, or intend to become a participant, informational meetings have been scheduled to help you understand the IRS guidelines and why these changes to our 403(b) administration procedures are being made. You are strongly urged to attend one of these meetings.

You may attend a 30-minute informational meeting at a location that is most convenient to work or home.

In a separate mailing, you will receive information regarding your appointment for your individual meeting with a Trust Services of America representative. Each appointment will be approximately fifteen minutes in length. The following items are necessary for you to bring to your individual appointment in order to properly calculate your personal MAC:

• Your current pay stub;

• Your most recent Public Employees’ Retirement System/State Teachers’ Retirement System Statement;

• The total dollar amount of all prior 403(b) TSA (and 457 Deferred Compensation if applicable to you) contributions you have made while employed by the district. (If you are unable to make this calculation, bring the most current statement of all of your accounts and a Trust Services of America representative will assist you.);

• Current statement of all 403(b) accounts; and

• Copy of previously completed Maximum Exclusion Allowance (MEA) calculation, if you have one.

If you have any questions regarding information in this circular please call Fiscal Control Supervisor Kris Panfil at (619) 725-7670.