Enhancing Your Retirement Savings

What are tax-deferred 403(b) and 457 plans?

These are salary reduction plans available to employees of public educational institutions where contributions and investment earnings grow tax-deferred until withdrawal, at which time they are taxed as ordinary income. Employees lower their taxable income while working, while increasing their retirement savings.

A 403(b) or 457 plan allows you to make your pretax contributions by convenient payroll deduction. You control your retirement future. You experience tax-deferred growth and compounding interest (the difference you would have paid in taxes earns interest plus that interest earns interest, compounding even more).

What is a Roth 403(b) plan?

This is a salary reduction plan available to employees of public educational institutions where contributions are post-tax. These accounts don’t reduce taxable income while working, but the earnings are tax-free at retirement.

What is the difference between a traditional 403(b) and a Roth 403(b)?

Traditional 403(b): Pretax contributions, taxed distribution
Roth 403(b): Post-tax contributions, untaxed distribution (certain rules apply)

Are there limits on how much I can contribute each year?

Yes, the IRS limits the amount an employee can contribute each calendar year in a 403(b) plan and a 457 plan. The 2017 annual limit for 403(b) accounts and 457 accounts is $18,000 plus an additional $6,000 in catch-up contributions if the employee is age 50 or older at the end of the year. This limit is a combined limit for both the traditional 403(b) and the Roth 403(b). The limit applies separately to the 457 plan. For example, an employee (under age 50) may contribute $18,000 per year in a 403(b) account (traditional and Roth combined) and $18,000 per year in a 457 account.

How and when can I enroll in the plans?

There is no specific open enrollment period. Employees can enroll anytime by contacting one of the approved vendors to set up an account.

When can contributions be changed or stopped?

Contributions can be changed or stopped at any time. Please see the HR website for more information.