A 403(b) plan refers to a version of a tax-sheltered annuity or a TSA. The plan is essentially a retirement account for employees working for public schools and nonprofit organizations, along with state and local governments. If you work for any of the mentioned institutions, you should be able to enroll in an account and gain the advantages that it can provide.
Here are some good reasons why you may want to use a 403(b) plan:
Just like other retirement accounts, a person would be able to save as much money as possible. However, A 403(b) plan would be able to give a variety of tax benefits. Both the Traditional 403(b) and the Roth 403(b) plan can provide their own spin on the perks.
The most notable is the Traditional 403(b)’s ability to take deferred compensation, which can bring about tax savings on an individual’s total taxable income. The 403(b) helps you save on the overall tax that needs to be covered compared to other retirement accounts.
Another benefit of the 403(b) plan is that people eligible for this program will have taxes on their investment income deferred. Having that income deferred can result in better savings. It should help you explore different investment options and mix them up as you wish. Don’t hesitate to get in touch with a registered investment advisor who would be happy to assist you.
Potential Employer Contributions
No matter the type of 403(b) plan that you’re under, your employer will be equipped with matching your contributions to your account. This should be something that goes beyond your regular salary.
If you find that you aren’t getting those employer contributions, it may be because of the amount you’re currently contributing. It’s best to discuss the whole ordeal with a licensed agent who can advise you on how to approach your employer and what to do.
Some retirement accounts would need you to manually deduct from your income, bringing up quite a bit of hassle. A 403(b) plan relieves you of that responsibility, though, as there are automatic deductions made to an institution’s payroll. It can make managing your account and saving up that much easier as there’s no temptation to spend it either.
With that being said, there are people who may have to deal with sudden expenses that would need them to tap into their savings. There are a number of retirement accounts that restrict access, but the 403(b) plan lets you access the cash you’ve saved up. Withdrawals are under your employer’s provisions, so be fully informed before such a transaction.
If you’re a government employee, but you decide to serve a nonprofit organization, it’s still possible to have your existing 403(b) account transferred. Some may opt to convert that account of theirs into an individual retirement account or IRA, which means you will be managing it by yourself. There are also different contribution limits to take note of.
Reading these reasons should helpfully let you catch up on what exactly is great about the 403(b) plan and indulging in it. Retirement is important to prepare for, so don’t wait for another second in setting up an account.
Curious about state employee retirement planning? My State Pension helps education, state, and municipal government employees in the USA maximize their benefits, constructing a retirement plan suitable for them. Get in touch with us today!