403(b) Plan

The following information is provided by IRS.gov.

A 403(b) plan (tax-sheltered annuity plan or TSA) is a retirement plan offered by public schools and certain charities. It’s similar to a 401(k) plan maintained by a for-profit entity. Just as with a 401(k) plan, a 403(b) plan lets employees defer some of their salary into individual accounts. The deferred salary is generally not subject to federal or state income tax until it’s distributed. However, a 403(b) plan may also offer designated Roth accounts. Salary contributed to a Roth account is taxed currently, but is tax-free (including earnings) when distributed.

Eligible employers are a:

  • public school, college, or university,
  • church; or
  • charitable entity tax-exempt under Section 501(c)(3) of the Internal Revenue Code

Pros and Cons:

  • Flexibility in contributions
  • Investment options are limited to those chosen by the employer
  • may have high administrative costs
  • optional loans and hardship distributions add flexibility for employees

Who contributes

Employee salary deferrals; employer may contribute.

Contribution limits

Total contributions to each employee’s 403(b) account or annuity are limited.

Filing requirements

Certain 403(b) plans may be subject to annual Form 5500 filing requirements.

Participant loans

Permitted if the terms of the plan allow loans.

In-service withdrawals

Yes, but subject to possible 10% if under age 59-1/2.

We will be pleased to answer any questions you have or send over a proposal.

You can reach us at by phone at 407 924-7950, email at mmarini@ksifa.com, or simply complete the proposal request form on our homepage.

Michael J. Marini, President & Financial Adviser, Orlando 401k Specialists