Wise Information for K‑12 Employees



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The 403(b) Basics: Other Plan That May Be Available: 401(a)

Often called a Money Purchase Plan, a 401(a) is an employer sponsored plan. Contributions are made on a pre-tax basis. Earnings not subject to tax until withdrawal.

2019 Contribution Limits

  • For 2019, the lesser of: 100 percent of compensation or $56,000
  • Typically, contributions are made by the employer

How Different From Other Defined Contribution Plans

Employer has more control. An employer can customize a 401(a) for a specific employee. Plan eligibility determined by employer (see your employer’s 401(a) plan document for details).

Separation of Service

  • Upon separation of service, balance can be transferred to another eligible retirement plan without being taxed.
  • May take penalty-free withdrawals at retirement (if age 59 ½). 

Withdrawal Rules

  • May take penalty-free withdrawals at retirement (if age 59 ½). 
  • After you reach age 70 1⁄2 or separate from service, whichever is later, you will be required to withdraw at least a minimum amount from your account each year, per IRS rules.

Other 401(a) Notes

  • Some 401(a) plans are mandatory
  • Employer may offer a 401(a) in lieu of participation in a defined benefit plan.
  • Can contribute to a 403(b) and a 457(b) in addition to a 401(a).
  • Employer not required to offer a 401(a)

More Information on Your Plan

Check your employer’s 401(a) Plan Document

Who is Eligible to Offer a 401(a) Plan?

Under Internal Revenue Code Section 414(d), a governmental plan is an IRC Section 401(a) retirement plan established and maintained for the employees of:

  • the United States or its agency or instrumentality;
  • a state or political subdivision, or its agency or instrumentality; or
  • an Indian tribal government or its subdivision, or its agency or instrumentality (participants must substantially perform services essential to governmental functions rather than commercial activities.)
  • IRS 401(a) information 

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