A 403(b) is a retirement plan set up by your employer that allows you to make contributions through payroll deduction on a pre-tax basis. This allows you to receive the tax benefit immediately. Your account accumulates tax-deferred. Therefore, when you withdraw your money (typically during retirement) you will be taxed on the amount of the distribution. 403(b) plans offer convenience, simplicity, structure, and so much more.
Some employers also offer Roth 403(b) contributions. These accounts act similarly to a Roth IRA. Your contribution is payroll deducted on a post-tax basis. Upon retirement, you are allowed to take distributions tax-free.
403(b) plans offer higher contribution limits compared to an IRA or Roth IRA.
Annual Limit on Elective Salary Deferrals
The dollar limit on a participant’s elective salary deferrals into a 403(b) plan, and additional “catch-up” contributions permitted for participants age 50 and over, phase in according to the following 2015 Table:
Age 49 or less $18,000 or Income (whichever is lower)
Age 50+ $24,000 or Income (whichever is lower)
A 403(b) plan may (but is not required to) allow additional “catch-up” contributions (elective deferrals) by participants age 50 and over. A participant is deemed to be age 50 for a particular year if the participant turns 50 during that year. Catch-up contributions for a particular year cannot be greater than the lesser of the maximum incremental dollar amount allowable ($6,000 for 2015), or the excess of the individual’s compensation for the year over other elective deferrals made for the year, ignoring the additional catch-up amount.
In 2015, the general limit on an employee’s 403(b) contributions, ignoring any age-50+ catch-ups, is the lesser of the elective deferral limit ($18,000), or the section 415 defined contribution limit, which is 100% of compensation, up to a maximum of $53,000.
If permitted by the 403(b) plan, an employee that has at least 15 years of service may be eligible for an additional catch-up elective deferral (generally, $3,000).
We offer 403(b) plans with the following school districts:
- Chambersburg Area SD
- Franklin County Career Tech
- Shippensburg Area SD
- Fannett-Metal SD
- Big Spring SD
- Central Fulton SD
- Tuscarora SD
- Lincoln Intermediate IU #12
- Waynesboro Area SD
Call us today to setup your new 403(b) or to make any changes to your current plan!