Transition From PARS Final on December 21st
(reprinted from the SF Educator)
On December 21st all UESF paraprofessional members will officially have their funds transferred out of the Public Agency Retirement System (PARS). The date marks the culmination of a years-long effort led by UESF Vice-President for Paraprofessionals Carolyn Samoa and UESF to get paras out of the poorly managed retirement system.
In October all active and former paraprofessionals were notified that they needed to choose how to invest the money they had in the PARS system. They were given three options – to choose an Individual Retirement Account (IRA), a 403(b) account, or to get the money directly released to them. Because of hefty taxes and penalties, paras were urged to think twice about directly withdrawing their funds.
For paras who made the decision in October, the PARS money has already been released. For paras who waited until the December 21st deadline, the transfer could take up to six to eight more weeks. Carolyn Samoa urges paraprofessionals to call the PARS system at the end of January if their funds have yet to be transferred. PARS can be reached at 1-800-540-6369.
PARS Money to Go into IRA for Paras Who Did Not Make Decision For paraprofessionals who did not fill out the paperwork by the December 21st deadline, their retirement funds will be transferred into an IRA man- aged by a firm called Millennium Trust. According to the SFUSD, it may take several weeks for this transition to go through. Paras who did not fill out their paperwork are urged to look for US mail in January and February from the district or Millenium Trust regarding their new accounts.
It will be up to these paras to inform Millennium Trust what kind of investment they would like to choose for their new IRA accounts.
Though the SFUSD originally agreed to the IRA transfer for paras who did not make the decision for themselves, in October they informed paras at a counseling session that their money would be released directly to them, possibly resulting in severe taxes and penalties. When she heard this, Carolyn Samoa jumped into action – demanding that the SFUSD stick to the original plan and release the funds to an IRA.
This quick action ensured that these paras would not be forced to pay taxes and penalties of up to 50% of their assets. “When I heard that the district reversed course and was going to force paras into a direct payout that would severely punish them I couldn’t believe it,” says Carolyn. “After years of struggle to get out of PARS, this was the final insult. Fortunately, the district decided to honor our original agreement, and we are finally through with PARS once and for all.”
To celebrate the final exodus from PARS, UESF is looking to put together a party at the UESF Paraprofessional Division meeting in February. Look for more information in the coming weeks.
Paras Urged to Re-invest Funds to Avoid Taxes and Penalties
Several Financial Counseling Sessions Available to Aid Decision
October 11, 2012 - This week all paraprofessionals were sent a letter by the SFUSD informing them of the need to choose a new place for the money in their PARS accounts. The letter was sent along with the annual statement from PARS for the period ending June 30, 2012. All paras, and former paras, who have money in the PARS system must decide by December 21, 2012 where to invest their PARS assets.
Paras can choose one of three options for their PARS money: Directly rolling it over into a 403(b), directly rolling it over into an Individual Retirement Account (IRA), or withdrawing the money. If paras decide to withdraw the funds, state and federal taxes and penalties could take as much as 50% of the value of the funds. UESF therefore urges paras to investigate all other options before withdrawing the money directly.
If paras do need some money in the short term, one investment option is to choose the 403(b) plan. These plans allow you to borrow up to 50% of the value of your assets, up to $50,000, without incurring any penalties so long as you pay the loan back within five years.
In addition to choosing between a 403(b) and an IRA, paraprofessionals will also need to choose which type of investment to place their money in. Based on their age and the value of their other investments, paras will need to choose how much risk they are willing to tolerate when re-investing their funds.
According to the SFUSD, the necessary forms for the decision will be sent on or before the week of October 21st. UESF strongly urges paras to consult their own financial adviser, and to consider attending one of the several upcoming counseling sessions.
Upcoming Financial Counseling Sessions
To assist paraprofessionals in making their decision, the SFUSD will offer several counseling sessions in the coming weeks throughout the district. Mosher Financial will also offer additional sessions as well. All paras are strongly encouraged to attend one of these sessions in order to make the best decision for their money.
Thursday, October 11th – 555 Franklin St. (4:30-6:00 p.m.)
Thursday, October 18th – 135 Van Ness Ave. (6:00-8:00 p.m.)
Saturday, October 20th – 555 Franklin St. (10:00 a.m. – 12:00 noon)
Wednesday, October 24th – 1099 Hays St. (4:00-6:00 p.m.)
Thursday, October 25th – 135 Van Ness Ave. (4:00-6:00 p.m.)
Mosher Financial Sessions
Mosher Financial will also offer counseling sessions for paras. Workshops take place every hour during the times specified below:
Saturday, October 13th – 3180 18th St., #102 (9:00 a.m. – 1:00 p.m.)
Saturday, October 27th – 3180 18th St., #102 (9:00 a.m. – 1:00 p.m.)
Tuesday, October 30th – 2310 Mason St. (4:00-6:00 p.m.)
City Financial Fair – October 20th
The City of San Francisco and the Financial Planning Association of San Francisco invite you attend San Francisco Financial Planning Day on Saturday, October 20, 2012 from 9:00 am to 4:00 pm at UC-Hastings College of the Law (Snodgrass Hall), where you’ll be able to meet one-on-one with dozens of professional financial planners to discuss your personal finance questions, concerns and interests.
For more information, click here.