403(b) Questions


 

WHAT IS A 403(b) PLAN? A 100% tax-deferred retirement investment plan available to employees of school systems and non-profit organizations. Your taxable income is reduced by your contribution amount for federal and state tax purposes. Contributions may be made to mutual funds offered through Section 403(b)(7) custodial accounts or to tax-sheltered annuities qualified under Section 403(b).

 

HOW MUCH CONTRIBUTE EACH YEAR?

2018

403(b), 457(b), & 401(k) AGE - 49 & LESS AGE - 50 & OVER
Less than15 years of service 18,500 24,500
15 or more years of service 21,500 27,500

 

IRA  and ROTH IRA       5,500                6,500                 

 

 

MAY I CHANGE THE AMOUNT OF MY CONTRIBUTIONS? The IRS now allows more than one change per year. Most school systems can accommodate at least two changes per year. (All contributions must be made in accordance with the IRS maximum exclusion allowance).

 

DO I HAVE ACCESS TO MY MONEY? Yes, in most cases you may borrow against your 403(b)(7) mutual fund account or tax sheltered annuity with certain restrictions.


WHEN CAN MY MONEY BE TAKEN WITHOUT A TAX PENALTY? Generally, at age 59 1/2, if totally disabled, or by your beneficiary after your death. 

 

WHAT HAPPENS IF I MOVE OR LEAVE MY PRESENT EMPLOYER? Contributions will stop. However, your money will continue to be tax-deferred until withdrawn.   


Withdrawals are taxed as ordinary income in the year received.  Tax penalties and penalties for early withdrawal may apply if funds are withdrawn prior to age 59 ½.