Retirement planning is an important part of everyone's financial strategy. For employees of schools, one of the best ways to invest for the future is through a special plan know as a "403b."

Named after the federal tax section that governs it, the 403(b) plan is a powerful - and unique- way to invest. Other investments have various purposes, but a 403b is specially designed to help you prepare for a secure retirement in the future.

The chief advantage of a 403(b) plan is that your earnings are allowed to grow and compound year after year, without being reduced by taxes. Of course, once you begin removing your money from your 403(b), you will pay taxes, but often at a lower tax bracket because your income is typically less.

There is a second advantage: When you invest through payroll deductions, the money is deducted from your taxable income so you have less tax to pay today.

The amount of your salary you may contribute to a 403(b) is limited by the IRS. The maximum amount you may contribute can be calculated by your financial planner or your mutual fund company. This amount is unique to each individual but is approximately 16% of gross salary. If you contribute in excess of that allowed, you may be penalized by the IRS. Further, the Schalmont plan could also be penalized or even eliminated. Because of this the following guidelines have been established for Schalmont employees choosing the 403(b) option.

Where do you invest your money??? There are currently 17 vendors that offer 403b investment plans through the Schalmont School District. Check out some Financial Planning Resources to help you plan.

•Employees will be limited to a maximum calendar year contribution of 16% of their gross earning to a maximum of a $15,000 deduction or $20,000 (if aged 50 or over). This ensures that no one exceeds their allowable contributions. Further, you will be asked to sign a statement that you personally have no other 403(b) plan.

•Employees currently contributing above this amount will have their contributions reviewed to ensure that they are in compliance.

• Employees who wish to contribute more than the district imposed 16% contribution limit or wish to take advantage of the "catch up election" will need to have a qualified outside source calculate the maximum exclusionary allowance (MEA) and state in writing that they assume the responsibility for any contributions in excess of the IRS allowance.

The law regulating a 403(b) is quite complex. We suggest you contact a financial advisor, one of the mutual fund families on the district list of 403(b) vendors or your union representative for more information. You must sign up for a 403(b) plan with Laura Hungershafer at the District Office. If you have any questions please contact STA 2nd Vice President, Pete Rings.