I am in need of a little bit of clarification on the 457 catchup law. Here is my situation.
1.) I am a teacher retiring either in 2004 or 2005
2.) I am over the age of 50.
3.) A 457 plan was established in my district in the fall of last year (2003).
4.) I have yet to join the 457 plan.
5.) I have almost $50,000 in sick pay.
6.) I'm currently maxing out on my 403b plan.
My goal here is to shelter as much sick pay as possible.
1.) Even though I have not yet joined the 457 plan, if I retire this year, am I eligible to participate in the catch-up? If so, what is the max I can do? Can I go back to 2003 and put away the total $26,000 between both years or is it because I joined the plan in 2004, and not 2003, I cannot do that.
2.) What would change from the above if I retired in 2005? I understand the one time three year catch-up rule designation of retirement age for the catchup.
3.) If I retire this year, can I designate my retirement age as one year ahead of when I do actually retire and take advantage of the catch-up ?
4.) Depending upon the answers to the above three questions, what is my best way to shelter as much of my sick leave as possible?
My concern is that someone in our district is saying I can shelter up to $26,000 out of my sick pay regardless of if I joined the plan in 2003 OR 2004. Another person is saying that because I did not join the plan in 2003, I am not eligible for ANY special catchup whatsoever other than the age 50 "bonus".
Can anyone out there shed some light on this matter for me?
A huge thanks in advance!