Retirement Services

403(b) Plans

Designed for employees of nonprofit and educational organizations, traditional, tax-deferred 403(b) contributions are made before income taxes are applied, and earnings and contributions are not taxable until they are withdrawn. Roth 403(b) contributions are made with after-tax dollars, but withdrawals, including earnings, are tax-free if certain conditions are met.

Advantages
  • More flexibility with contribution amounts due to increase in deferral limit
  • Participant deferral of current income taxes or pre-payment of income taxes for Roth option
  • Automatic Contribution Arrangement feature available
  • Contributions can only be invested in mutual funds or annuities
Eligibility
  • Organizations qualified under Internal Revenue Code section 501(c)(3) and educational institutions (nonprofit organizations, public school systems and churches) may establish 403(b) plans
  • After the first employee is allowed to participate, all other employees who want to contribute at least $200 per year must be allowed to participate, regardless of years of service
Maximum total plan contribution that the employer may deduct

N/A – Tax deduction is not an issue for tax-exempt organizations

Maximum annual allocation to participant’s account

100% of participant’s total pay or $55,0001, whichever is less

Maximum annual participant deferral (cannot exceed 100% of pay)

Up to $18,500; catch-up contribution of $6,000 if age 50 or older. Annual participant deferral can be before-tax, Roth after-tax or both, depending on plan terms.

Required employer contribution

For government plans, as may be mandated by state/local statute. For plans subject to ACP testing, if traditional safe harbor is set up, then one of the following:

  • Basic match3 formula (higher than with auto-enroll safe harbor)
  • Enhanced match4 formula
  • Non-elective contribution5

 

Drop in one of our branch locations or call our One Call Center at (800) 827-4522 for more information or to open an account.


1 The DC annual additions limit is effective for limitation years ending in the calendar year. The dollar limit is increased by the amount of the applicable catch-up contribution.
2 Salary deferrals into other qualified retirement plans count toward the $18,000 personal annual maximum contribution amount.
3 Basic match: 100% of participant contributions up to 3% of pay, plus 50% of participant contributions up to the next 2% of pay.
4 Enhanced match: 100% of participant contributions, but not less than 4% of pay or more than 6%; or A% of participant contributions up to the first B% of pay, plus C% of participant contributions up to the next D% of pay (C% may not be greater than A% and the sum of B% plus D% may not be greater than 6%).
5 Non-elective contribution: 3% of pay for all eligible employees, including those who do not contribute.

 

Investment products are not deposits or obligations of, or guaranteed by Lake City Bank or any other bank, are not insured or guaranteed by the FDIC or any governmental agency and are subject to investment risks, including possible loss of principal invested. Past performance is not a guarantee of future results.

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