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contributions are made before income taxes are applied, and earnings and contributions are not taxable until they are withdrawn.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 $53,0001, whichever is less

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

    Up to $18,000; 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

You are about to leave our site.

By following this link you are leaving Lake City Bank's website. Lake City Bank is not responsible for the content, links, privacy or security of the website you are going to.