Our 403(b) Smart Account allows you to save money on a pre-tax basis through payroll deduction. You will have to pay Social Security and Medicare taxes on the amounts you contribute but you do not have to pay federal income tax on your contributions, or on the account's earnings until you withdraw them from the Tax-Deferred Savings Plan. In most cases, you can defer state and local taxes on these contributions as well.

You can also contribute to an After-Tax Account in the Retirement Plan. Any contributions you make to this type of account are deducted from your pay after tax.

After-tax contributions are subject to "non-discrimination" testing. The testing that is required comes under section 401(m) of the Internal Revenue Code. The IRS requires that retirement plans compare after-tax contributions made by non-highly compensated employees to the after-tax contributions made by highly compensated employees. This is called "non-discrimination" testing, and it is designed to ensure that highly compensated employees are not unduly favored. If a YMCA fails the test, all or a portion of these contributions, plus interest, will be refunded to the highly compensated employees.
 

To set up a 403(b) Smart Account, download the form, complete it and give it to the person who administers the Retirement Plan at your YMCA, who will let you know when contributions can begin.
 

Because they reduce your current year's taxable income, tax-deferred contributions may only be made through payroll deduction. After-tax contributions may be made through payroll deduction or as a lump sum. All contributions, whether they are tax-deferred or after-tax, are subject to limits. Read about contribution limits to find out how much more you can save, starting today.
 

By making voluntary tax-deferred contributions, you lower the base amount for which you are required to pay federal income tax.

Also, people who make voluntary tax-deferred contributions may be eligible to take a Retirement Savings Contributions Credit against their federal income tax depending upon their income.
 

The Retirement Savings Contributions Credit is a federal income tax credit that allows you to claim credit for a percentage of your voluntary tax-deferred contributions. If your income falls under the amount listed in the following chart for your filing status, you may be eligible to claim a percentage of your tax-deferred savings. For 2008 these amounts are:

Filing Status	Married-Joint Filers	Heads of Household	Single Filers
Maximum Income	$53,000	$39,750	$26,500

The IRS website has more information about this tax savings.

 

The federal government sets limits on the amounts you can contribute annually to your Voluntary Accounts.
 

All after-tax contributions to the Fund for the previous year must be received by January 31.