Whether you’re just getting started in your career or have been impacting the lives of students for years, you deserve to feel confident your retirement plan is on the right track.
What is a 403(b) plan?
A 403(b) plan is a retirement savings plan, sponsored by a tax-exempt organization or public school, that offers significant tax benefits while helping you plan for the future. You contribute to the plan via payroll deduction, which can make it easier for you to save for retirement.
How do I maximize my tax savings?
One important feature of a 403(b) plan is your ability to make pre-tax contributions to the plan. Pre-tax means that your contributions are deducted from your pay and transferred to the 403(b) plan before federal (and most state) income taxes are calculated. This reduces your current taxable income — you don't pay income taxes on the amount you contribute, or any investment gains on your contributions, until you receive payments from the plan.
When can I contribute?
While a 403(b) plan can make you wait up to a year to participate, many plans let you to begin contributing with your first paycheck. Some plans also provide for automatic enrollment. If you've been automatically enrolled, make sure to check that your default contribution rate and investments are appropriate for your circumstances.
What about employer contributions?
Employers don't have to contribute to 403(b) plans, but many will match all or part of your contributions. Try to contribute as much as necessary to get the maximum matching contribution from your employer. This is essentially free money that can help you pursue your retirement goals. Note that your plan may require up to six years of service before your employer matching contributions are fully vested (that is, owned by you), although most plans have a faster vesting schedule.
Will my pension be enough?
If you rely only on your state-funded FRS pension, there may be a significant difference between your pension and the income you’ll need to enjoy the retirement you deserve. A 403(b) could help bridge the gap.
Where can I get help?
Participating in your district’s 403(b) account can take you one step closer to a retirement that can support your lifestyle. If you need help talking through your options, find a financial professional to get started. Whether in person or virtual, our consultations are offered at no cost to you and there is no obligation.