403(b)

 

What is a 403(b)?

A 403(b) retirement plan, also known as a tax-sheltered annuity plan, is offered by public schools and certain 501(c)(3) tax-exempt organizations. This tax-advantaged vehicle resembles a 401(k) and allows employee salary deferral contributions and employer match. Traditional and Roth options are available, and mandatory withdrawals (RMDs) must be made at age 72, unless the employee is still working for the company past age 72.

 

TL;DR –A 403(b) is an employer-sponsored plan offered by public schools and certain tax-exempt organizations that allows employee contributions and employer match.

 

Eligibility

  • Depends on each plan but could be 12 months of service and at least 21 years of age

Contribution Limits

Employees:

  • $19,500 per year if under age 50

  • $26,000 if age 50 or over

Employers:

  • Lesser of $58,000 or 100% of compensation for employees under 50

  • $64,500 for employees age 50 or over

Withdrawals

  • Traditional 403(b): Same rules as Traditional IRA

  • Roth 403(b): Same rules as Roth IRA

Taxes

  • Traditional 403(b): Same rules as Traditional IRA

  • Roth 403(b): Same rules as Roth IRA

 
Edward Oh