6 Smart Reasons to enroll in your employer's 403(b)/457 plan

As an employee of a school, hospital or other not-for-profit organization, you have access to a convenient, tax-advantaged retirement savings program that was created to help you prepare for our financial future. If you’ve yet to take advantage of this opportunity, read on to learn why contributing to a 403(b)/Tax Sheltered Account (TSA) plan may be a smart move.

1. Tax Advantages

• Pre-tax savings - By deferring compensation into a traditional 403(b)/457 account, you realize immediate tax savings on your contributions. Before any taxes are taken out, your paycheck is reduced by the amount you decide to invest. Therefore, your total taxable income is lower than it would be otherwise.
• Tax-deferred treatment of earnings - Taxes on any investment earnings in a traditional 403(b)/457 account are deferred as well. This way, you don’t pay taxes on anything that your deferred compensation earns until it is distributed. While withdrawals are taxed as ordinary income, the impact may be minimized as many investors find themselves in a lower tax bracket at retirement.¹
• If your employer’s plan offers a Roth IRA, then your contributions are not tax-deductible, but they can be withdrawn tax-free if certain conditions are met.

2. Easy to Participate

• Automatic salary deferrals - The amount you decide to defer each pay period will automatically be withheld from your paycheck and deposited into your 403(b)/457 account.

3. Easy to Use

• Access to your savings - Some 403(b)/457 plans offer a loan provision² that enables participants to borrow from their account for certain types of expenses, with principal and interest paid back into their account.

4. Thousands of Options

• Variety of investment options - As a retirement plan participant, you may choose from a wide variety of investment options, including a selection of nationally recognized mutual funds. In addition, you are able to change your investment mix as your needs change. Note: some employer plans may limit investment choices.
• Access to professional portfolio management - Many retirement plan participants have access to professional management programs offered through Lincoln Investment’s Retirement Solutions Premier.³ These programs provide built-in diversification, asset allocation techniques, professional investment selection and ongoing investment management through managed portfolios with a wide range of objectives. The portfolios are managed by a team of experienced investment professionals who monitor world markets and economic trends in an effort to capitalize on perceived emerging opportunities and minimize the effects of market volatility.

5. Time On Your Side

• The power of time - By making regular contributions to your employer’s 403(b)/457 plan, you have the potential to develop a sizeable nest egg over the long term.
• Built-in-dollar cost averaging⁴ - Since the amount you contribute is deducted from your paycheck at regular intervals, dollar cost averaging is built in to your investment plan. With dollar cost averaging, you buy more shares when prices are low and fewer when prices are high. Over time, the average amount paid (average cost) for each share may be less than the average price per share.

6. Professional Guidance

• Guidance from a Financial Professional - Your local Lincoln Investment financial professional is available to help you get started on the road to financial independence. They can answer your questions, work with you to develop a viable investment strategy and assist you in selecting the investment options that may best reflect your needs.

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1. Distributions from a traditional retirement account are subject to ordinary income taxes in the year distributed. Distributions prior to age 59½ may incur an additional tax 10% penalty and possible penalties for early withdrawal.
2. Defaulting on a loan from a retirement plan constitutes a distribution from that plan. Loans may affect cash values and death benefits. Please be aware that funds taken as part of a loan reduces your account balance and does not share in any gains or losses until loan repayments are made. If the load is not repaid according to the terms of the loan and a default occurs, it will result in adverse tax consequences, including possible penalties.
3. Not available through Retirement Solutions Participant Direct where the investor opts for a do-it-yourself approach and makes all investment selections on their own.
4. Dollar cost averaging does not assure a profit and does not protect against a loss in declining markets. Investors should consider their ability to purchase shares continuously during periods of falling share prices.