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contributions are made before income taxes are applied, and earnings and contributions are not taxable until they are withdrawn.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

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