Plan Eligibility:  You may participate in this tax sheltered Custodial Account only if you are employed by a public school system, including a college or university, or you are employed by an organization that is tax exempt under Section 501(c)(3) of the Internal Revenue Code. Hospitals, charities and churches, among others, are usually included in this tax exempt group. In addition your employer must approve this type of account for your use. It’s your responsibility to ensure that you qualify to participate because of your employment, so be sure to confirm your eligibility with your employer.

Contributions:  You may contribute to this Custodial Account in a number of ways:

Salary Deferral Contributions: If your employer approves, you can make pre-tax contributions to the Custodial Account directly from your gross pay.

Transfers from other accounts: You may transfer cash or the shares of regulated investment companies (mutual funds) from other 403(b) accounts.

(If you prematurely cash-in an annuity in order to transfer the cash to your Custodial Account, you may incur surrender charges from the annuity issuer)

Rollover Contributions:  Distributions that you receive from a 403(b) Plan may qualify for rollover to your Custodial Account. Even assets you previously rolled over to an IRA consisting only of assets from a 403(b) Plan or other 403(b)(7) custodial account may be rolled over to a Custodial Account.

Employer Contributions: This Custodial Account will also accept ERISA qualified contributions made by your employer on your behalf.

Distributions:  A 403(b)(7) Custodial Account is usually intended for long-term tax deferred retirement savings and investment. It gives you the mechanism within which you can direct your own financial strategy for retirement through investments in mutual funds or other permitted investments. Since the assets in the account are tax deferred and intended to be used exclusively for retirement, the law restricts distributions to only the following circumstances:.

1. You reach age of 59 1/2

2. You suffer a serious disability. According to the law, the disability must be serious enough to prevent any substantial gainful activity for an indefinite duration.

3. Death

4. You encounter a financial hardship. A financial hardship is generally described as temporary disability; medical care not covered by insurance; the purchase of your principal residence (but not mortgage payments); the payment of post-secondary tuition and related education fees for the next 12 months for you or your dependents; and to prevent eviction or the foreclosure of the mort-gage on your primary residence. (Financial hardships permit distributions of your salary deferral contributions only.)

5. You leave your job.

Investments: This law governing 403(b)(7) custodial accounts stipulates that investments must be limited to shares of regulated investment companies, such as mutual funds. 

Contact an investment professional to answer questions and assist you with this process.

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