#403Bplan #SaturdaySchool
So more retirement savings accounts for Saturday School this weekend...
WHO should invest in a 403(b)?
- Qualifying employees of public schools and tax-exempt organizations such as teachers, school administrators, professors, government employees, nurses/doctors, and librarians.
- You should consider investing in a 403(b) if this is your employer's retirement savings account and especially if a match is provided
WHAT is a 403(b) plan?
- "The features and advantages of a 403(b) plan are largely similar to those found in a 401(k) plan"
- Both have the same contribution limits; however, 403(b) vests sooner and can do a lifetime limit of additional $15,000 catch up after 15 years of service w/ qualified organizations
WHERE can I learn more about 403(b) Plans?
- This is unique to certain employees of public schools and tax-exempt organizations and so I would first start with the resources provided to you by your Human Resources specialist
- I don't think external resources are honestly going to be much more help over the Investopedia page in the comments section or much different from info on 401(k) plans
WHEN should I invest in a 403(b) Plan?
- If this is your work's equivalent to an Employer 401(k) and has a matching program, the 403(b) Plan should be the first place to save for retirement so that you get that match money
- As with any retirement savings account, the earlier you can fund the account and allow for time and compounding to grow your investments, the better it is for you
- If you qualify for additional $15,000 contribution for 15 years of service with the organization, this is also something you should consider
WHY should I invest in a 403(b) Plan?
- If there is a match then this is free money from your employer if you contribute the max
- 403(b) plans can come in Traditional and Roth which means that they have the benefits of their respective category whether tax savings on front or back end
- 403(b) plans are a tax advantage account meaning it can grow and compound tax free for retirement
HOW do I start my 403(b) Plan?
- Step 1 - Talk to HR and figure out how to start the 403(b) Plan whether Roth or Traditional
- Step 2 - Figure out how to fund the account and at least get the maximum match
- Step 3 - Be sure not to forget to pick which fund to invest in depending on risk tolerance
Resource: Investopedia / Video: https://www.youtube.com/watch?v=U9GakjGrB7c
P.S.: Who here has 403(b) over a 401(k)? I had this when I was in residency
#WeekendVibes #TaxEfficiency #TaxTail
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🤚403b here with the hospital I work at. I love it. % of my salary is put in on their end. Essentially free money that they put in for me. I also put in a monthly amount as well. Love seeing it grow. Going thru my 3rd year as an attending and it should hit 6 figures this year!
@jkim229 congrats!!! That is awesome. I love my 401k. Being an attending and having more control over ones life is so nice
I have been in teaching for years so I have a 403(b). Never had another option, but not sure if one is superior to the another?! Ive never heard anything about the 15k after 15 years - I must look into that?
@kimagines 💙
@natalieveebee I have had both a 403b when I was in residency and then a 401k where I work now. They are essentially the same thing minus the extra catch up of $15k. There are some limitations on how much of the $15k you can add in a year so just be sure to do your homework
thank you professor chris
Leana@lvirkus
401k has a catch up of 6.5k per year when you turn 50.
Here in Louisiana, we have statewide retirement systems for public school and college employees that the employer matches. In addition to the retirement system, I opted into two 403(b) accounts 20 years ago and I increased my contribution annually. There are other benefits to having a 403(b), including being able to take out a low interest loan against your account balance. I see a lot of employe…See more
@natalieveebee do you also have access to a 457(b)? If so, you should be able to contribute to both, and supercharge your retirement savings.
Here is more detail on the $15,000 catch up: “Some 403(b) plans also offer another kind of catch-up contribution, called the “15-year rule.” If you’ve been working for your current employer for 15 years or more and your average annual contribution was less than $5,000 per year, then you can contribute up to $3,000 extra per year, with a $15,000 lifetime maximum. You don’t need to be 50 years old t…See more
@yaredh300 you are welcome!
@lvirkus thanks for adding that! Found a link w/ some extra info to add to it for anyone that is interested in catch up contributions for 401k https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-401k-and-profit-sharing-plan-contribution-limits#:~:text=If%20permitted%20by%20the%20401,safe%20harbor%20401(k)%20plans
@ctsshah I have a 403(b). My vesting period was 3 years at my 403(b) current employer and my previous employer. I haven’t talked to enough non-403(b) folks to see if 3 years is faster/longer/the same.
@dhoward44 Yup you can take out low interest loans against your account! I think that is one advantage of keeping a 401(k) or 403(b) instead of just transfering the money into a Rollover account
@financepillowtalk 😁always appreciate the high level insights you add!!! hope you and Laura have a wonderful weekend
@financepillowtalk I think mine is 6 years or something long. My sister's 401(k) at JNJ was 3 years. Her current one at Anthem is 2 years. I think 3 is fairly standard
I’ve only ever worked in the public or nonprofit sectors and luckily have a 403(b).
I had three from different employers, two of which I moved over to my retirement account in Betterment (which has by now performed better than the rest).
I put 5% in the current third and only 403(b) and get an employer match. I guess that’s the benefit for us in these sectors for being overeducated and underpaid…See more
@gasparkles glad yo hear you are contributing to a 403b! Definitely a helpful way to grow w/ the tax advantages.
I have 401K and 403B’s since ‘94. Dollar cost averaged for 20 years. Caught up with higher amounts too when eligible. Until 2014. Don’t want to pull a penny until I’m 72 1/2 or whatever it is now for minimum withdrawals. At times I was matched and most other times I wasn’t, but I didn’t care. I still dropped a % in twice per month. 😎
that is awesome! i look forward to buildinh mine! @csg66
