TAX-DEFERRED RETIREMENT - 403b AND 457 PLANS
403(b) Contribution Form 403(b) Plan Document
457(b) Contribution Form
403b’s are also known as Tax Sheltered Annuities (TSA). 403b/TSA plans are retirement for schools, hospitals, and non-profit organizations.
For the most part 403b’s follow most of the same rules and regulations as 401k plans.
- 403b plan can be combined with a 457 plan.
- The program is voluntary.
- Employees who want to participate in a TSA designate a portion of their salary to contribute on a per pay basis.
- Contributions are pre-taxed and are automatically deducted from the payroll. State Federal income taxes are then calculated on remaining pay. Pre-tax contributions lower taxable income.
- Contributions to your TSA are not taxed until money is withdrawn.
As a plan participant, you will benefit in many ways
- Reduce your taxable income while saving pre-tax dollars.
- Gain interest in your tax deferred investment.
- Select the investment companies and funds you want to participate in.
- Access your money through loans and withdrawals when necessary.
- Have contributions automatically deducted from your paycheck.
Dividends and investment earnings grow tax deferred until they are withdrawn after age 59 ½ at which time the withdrawals will be taxed as income. Withdrawals prior to age 50 ½ usually incur an additional 10% penalty. However, most 403b plans allow investors to take out a loan. Both principal and interest are paid back to your 403b account through automatic payroll deduction.