Retirement education 

Knowledge is power. Understanding some basic information about saving and investing can help you have confidence in establishing a retirement savings program.

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403(b) retirement plan

A 403(b) is a retirement plan set up by your employer that allows you to set aside money for retirement on a pre-tax basis through salary reduction. Your premium contributions into a 403(b) plan and any earnings can grow tax-deferred until you make a withdrawal, presumably at retirement.

Contributions and investment earnings in a 403(b) plan are tax-deferred until distributed, presumably at retirement, at which time they are taxed as ordinary income. A 403(b) plan may also offer a designated Roth account. Contributions to a Roth account are taxed currently and if certain conditions are met, earnings will be taken tax-free when distributed.

While most teachers receive a pension from their school upon retirement, the money from a pension typically does not equate to their salaries. Putting money into a 403(b) before retirement can help offset the difference between your current salary and the amount you receive from a pension.

Benefits of a 403(b):

  • Contributions through payroll reductions reduce your current taxable income.
  • Higher payment limits than Individual Retirement Account (IRAs).
  • Income taxes are deferred until withdrawal at retirement.
  • Disciplined retirement planning through regular payroll reduction.
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457(b) retirement plan

A 457(b) is a retirement plan available to employees of state and local government agencies and entities tax-exempt under section 501(c) of the Internal Revenue Code. Check with your employer to see if they offer a 457(b) plan.

The Internal Revenue Code allows funds for 457(b) plans to be invested in annuities and mutual fund custodial accounts.

Benefits of a 457(b):

  • Contributions through payroll reduction reduce your current taxable income (except Roth contributions).
  • Higher annual contribution limits than Individual Retirement Accounts (IRAs).
  • Income taxes are deferred until withdrawal at retirement.
  • Creates a disciplined approach to retirement planning through regular payroll reduction.

Individual Retirement Accounts (IRAs)

An IRA can help you save for retirement in a tax-advantaged way. The IRA itself is not an investment, but it holds the investments you choose to save toward your retirement goal. There are two types of IRAs.
Traditional IRA
A traditional IRA is a type of retirement plan that allows earnings to grow tax-deferred and the possibility of tax-deductible contributions.*

Similar to other retirement plans, IRAs have annual contribution limits. The annual contribution limits for IRAs are significantly lower than 403(b) or 457(b) plans. Your total contributions to Roth and traditional IRAs may not exceed the limit established by the IRS for that year.
Roth IRA
A Roth IRA is a type of IRA where earnings are
tax-deferred and contributions are not tax-deductible. In addition, if certain conditions are met, the earnings will be tax-free. To establish a Roth IRA, you must meet income eligibility requirements.

Roth IRAs have annual contribution limits that are the same as traditional IRAs. Your total contributions to Roth and traditional IRAs may not exceed the limit established by the IRS for that year.
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Annuities

Horace Mann offers a variety of annuity products designed to meet different needs, many of which can provide tax-deferred growth. The right annuity for you depends on your retirement income and goals. This annuity could have a fixed rate, enable you to invest in the market, or only require one payment.

  • Annuities are retirement products that can help provide a steady, guaranteed stream of income in retirement. You can contribute to an annuity alongside any contributions you make to a 401(k), IRA, or pension.
  • An annuity is a contract between an investor and an insurance company. The insurance company promises to make periodic contributions . These contributions are in exchange for the premiums that the investor pays.
  • Annuities may be immediate or deferred. With an immediate annuity, you (or a payee) begin to receive income shortly after the initial payment. Deferred annuity payouts don’t begin until a future date.

Annuities fall into one of two broad categories: qualified and non-qualified annuities. Payouts are taxed differently.

Qualified annuities
An annuity is considered qualified if it is funded with pre-tax money.** This can be done through salary reduction or a tax deduction. Distributions from qualified annuities are subject to income tax because the premiums were not taxed before being contributed to the annuity. Any earnings received from the annuity are also taxable if held for 5 years and the annuitant is over 59½.
Non-qualified annuities
Annuities purchased with after-tax money are non-qualified annuities. Distributions from non-qualified annuities are only taxed on the earnings portion because the principal consisted of after-tax premiums.

Annuity resources library

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Fund Fact Sheets
Use the annuity fund fact sheets to help determine if a particular fund should be part of your investment portfolio.
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Monthly Performance Flyers
Use the annuity performance flyers to assist in determining your retirement choices.
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Retirement Calculators
Access a number of savings and retirement calculators for smarter choices.
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Prospectuses Online
Get more detailed information about the investment options available to you.
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Asset Allocation Worksheet
Learn how you can divide your savings allocations among different assets, such as stocks, bonds, and cash, factoring in your tolerance for risk.
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Investment & Market News
Check out our resource page with educational links to some of our fund companies.

Resource Links

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  • What are the Internal Revenue Service (IRS) contribution limits?
    To view IRS contribution limits here is our "Maximize your contributions" document.
  • Why is it important to keep your beneficiaries up-to-date?

    Life events such as birth, marriage, retirement or death can happen at any time. And when you experience a major change, it’s important to make sure your beneficiaries are up to date.

    Do you have a primary and secondary beneficiary named on your account? If so, are they current? Making sure your information is accurate helps protect your assets from potentially transferring to the wrong person. And if you haven’t named a beneficiary, state law will determine who receives your assets.

    Remember, keeping your beneficiary information up to date ensures that you are in control of where your assets will go when you are gone. More importantly, you can feel confident knowing your loved ones will be taken care of.

  • Should I consolidate my retirement accounts?

    You may be interested in a more relaxed pace in your life. Worrying about your retirement accounts, or how you'll receive income from them, may not be something you want to deal with.

    Let us help you. By consolidating your accounts in one place, it will be easier for you to oversee them. And with a retirement income strategy in place, you’ll know what income you can expect to have every month rather than trying to guess.

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*Tax-deductible payments have eligibility requirements based on income, filing status and participation in other retirement plans. You don't pay income taxes on tax-deductible IRA contributions or any earnings until you withdraw money, which is usually at retirement.

**Qualified annuities can be funded under Internal Revenue Code 403(b), 457(b) or 401(a). A qualified annuity is funded with pre-tax money, which can be done through salary reduction except for Roth contributions.  Distributions from a qualified annuity are subject to income tax because the premiums were not taxed before being contributed to the annuity.  Any earnings received, from the annuity, except for designated Roth accounts, are also taxable when withdrawn.

Horace Mann Life Insurance Company underwrites Horace Mann annuity products. 

The information provided here is for general informational purposes only, and should not be considered a recommendation or investment, tax or legal advice.

Withdrawals from a 403(b) or 457(b) annuity are restricted by the Internal Revenue Code and may be further restricted by your employer's plan. Generally, you may make a withdrawal from a 403(b) annuity only upon reaching age 59½, severance from employment, disability or certain hardships (if allowed by the plan). Generally, you may make a withdrawal from a 457(b) annuity only upon reaching age 59½, severance from employment, or an unforeseeable emergency (if allowed by the plan). If you take money out before age 59½ you could be subject to a federal penalty tax of 10% (except for 457(b) contracts) in addition to income taxes. This is not intended to be tax advice. You should consult with a tax advisor regarding any tax-favored retirement products and your specific situation.

While you can receive the benefits of tax deferral in any product used in an IRA, an annuity offers additional benefits, including a death benefit and the opportunity to choose lifetime income options. In order to offer these benefits, there may be additional fees included in the annuity. There are no additional tax benefits in an annuity when used in an IRA. Annuities should be considered long-term investments.

The factors which affect your decision to contribute to a traditional or Roth IRA are complicated and can change each year. Contributions to traditional and Roth IRAs are aggregated for purposes of annual limits. If you take money out before age 59 ½, you could be subject to a penalty tax of 10% in addition to income taxes. This is not intended to be tax advice. You should consult with a tax adviser regarding any tax-favored products and your specific situation.

Comments and general market-related projections are based on information available at the time of writing and believed to be accurate; are for informational purposes only, are not intended as individual or specific advice, may not represent the opinions of the entire firm and may not be relied upon for future investing. Investors are advised to consult with their investment professional about their specific financial needs and goals before making any investment decisions.

Horace Mann Life Insurance Company does not endorse, nor is responsible for, any content provided in posts or links on this website. Links to third-party media, articles and/or websites are for general information purposes only and do not constitute an offer or solicitation of any kind. They are not intended, and should not be relied upon, as investment, insurance or financial advice.