Tax Sheltered Annuities

CODE: GCBCC

Maine School Administrative District No. 31

TAX SHELTERED ANNUITIES

M.S.A.D. #31 makes available to all employees a voluntary salary reduction 403(b) program into which employees may electively defer compensation to be deposited in fixed and variable annuities which are qualified under Section 403(b)(1) of the Internal Revenue Code of custodial accounts offering regulated investment company stock under Section 403(b)(7) of the Internal Revenue Code.

Under the M.S.A.D. #31 403(b) program, each participating employee retains all rights to the individual 403(b) account (or accounts), and each employee exercises the right of selection of any of the products or investment options made available by service providers that meet the requirements for participation in the 403(b) program. The School Board makes no investment recommendations and bears no responsibilities for employees’ selection of any annuity product or custodial account, and makes no representations to employees about the advisability, appropriateness, or tax consequences of any 403(b) account to which contributions are made.

It is the intention of the School Board that the 403(b) program will conform with the applicable federal and state statutory requirements, and that employee salary reduction contributions to the program be within eligible limits as set out in IRS regulations. Each employee, and not M.S.A.D. #31, shall be individually responsible for the determination of those eligible limits.

M.S.A.D. #31 authorizes the Superintendent to act on the Board’s behalf with respect to the plan, to formulate rules and procedures for the purchase by employees of 403(b) accounts, and to develop procedures for the administration of the plan.

Qualified annuities and custodial accounts can provide a tax advantage to employees sufficient to justify some additional administrative costs to the payroll process. Therefore M.S.A.D. #31 will offer payroll deductions for employee 403(b) accounts to those vendors who complete and sign within the specified time limits the appropriate salary reduction agreement form for 403(b) programs, and the questionnaire for service providers.

HOLD HARMLESS AND INDEMNIFICATION AGREEMENT

A hold harmless and indemnification agreement in a form prescribed by M.S.A.D. #31’s Legal Counsel, shall be executed by each service provider. Execution of this agreement shall be a requirement for establishing automatic payroll deduction for any service provider.

FREQUENCY OF PAYROLL DEDUCTION CHANGES

Employees may change the level of payroll deductions for annuity premiums twice per calendar year except under unusual circumstances and subject to the approval of the Superintendent of Schools. Requests for changes are to be made in writing.

First Reading: 10/17/2001

Second Reading: 11/20/2001