403(b) Plan: Conclusion
AAA
  1. 403(b) Plan: Introduction
  2. 403(b) Plan: Eligibility Requirements
  3. 403(b) Plan: Contributions
  4. 403(b) Plan: Distributions
  5. 403(b) Plan: Conclusion

403(b) Plan: Conclusion

By Denise Appleby

A 403(b) plan is a retirement plan for certain employees of public schools, certain ministers and employees of certain tax-exempt organizations.

Let's recap:

  • Individual accounts in a 403(b) plan can be any of the following types:
    • an annuity contract, which is a contract provided through an insurance company
    • a custodial account, which is an account invested in mutual funds
    • a retirement income account set up for church employees, which can invest in either annuities or mutual funds
       
  • The features of the 403(b) plan are very similar to the 401(k) plan.
  • Employees' compensation is based on W-2 wages, and an employee's compensation in excess of $255,000 may not be considered for purposes of making a 403(b) contribution.
  • The investment options for a 403(b) account are determined by the 403(b) product.
    • A 403(b) annuity contract must invest in an annuity product provided through an insurance company.
    • A custodial account, which is provided through a retirement account custodian, must invest in regulated investment companies, such as mutual funds.
    • A retirement income account may invest in vehicles such as annuities and publicly traded securities. Only churches and church-related organizations may establish retirement income accounts.
  • Distributions while the employee is under age 59.5 are subject to a 10% early-distribution penalty unless the employee qualifies for an exception.

  1. 403(b) Plan: Introduction
  2. 403(b) Plan: Eligibility Requirements
  3. 403(b) Plan: Contributions
  4. 403(b) Plan: Distributions
  5. 403(b) Plan: Conclusion
RELATED TERMS
  1. Current Service Benefit

    The amount of pension benefit accrued by an employee who had ...
  2. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...
  3. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  4. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  5. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  6. Death Master File (DMF)

    Also known as Social Security Death Index. A list of people whose ...
  1. What option strategies can I use to earn additional income when investing in the ...

    Discover how risk-averse investors need to build a retirement portfolio. The major factors are diversification and avoiding ...
  2. What is fiduciary liability insurance, and what are its benefits?

    Understand what fiduciary liability insurance is, what companies or individuals can benefit from having it, and when it is ...
  3. Should I purchase a master limited partnership (MLP) in my retirement account?

    Learn why investors may have to pay taxes on dividends from master limited partnerships, or MLPs, held in individual retirement ...
  4. How should I invest the money I keep on my IRA?

    For individuals who are just starting to save, certificates of deposit can be a good place to start, but the interest rates ...

You May Also Like

Related Tutorials
  1. Retirement

    Consolidating Your Retirement Money

  2. Retirement

    Analyzing The Best Retirement Plans And Investment Options

  3. Budgeting

    The Complete Guide To Retirement Planning For 40-Somethings

  4. Retirement

    The Complete Guide To Retirement Planning For 50-Somethings

  5. Taxes

    The Complete Guide To Retirement Planning For 30-Somethings

Trading Center