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A 403(b) plan is a retirement savings plan available to:

  • Employees of certain public school systems
  • Tax-exempt groups, like non-profits or certain health care organizations
  • Self-employed ministers

Like a 401(k), a 403(b) offers a tax-deferred plan to create long-term investment growth and retirement savings. Contributions usually come from:

  • The employee
  • The employer matching the contribution an employee makes
  • Or the employer through a salary-reduction agreement

The most an employee can contribute to a 403(b) plan changes from year to year. In 2015, the maximum was $18,000. Employees 50 and older can also make catch-up contributions. In 2015, the maximum catch-up contribution was $6,000 beyond the basic limit.

Individual 403(b) accounts can be an annuity provided by an insurance company, a custodial account that comes from a mutual fund, or a retirement account set up for church employees.

Certain aspects that differentiate 403(b) plans from 401(K)s may change yearly. Go to IRS.gov for the most current guidelines.

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