403(b) Plans

Features

• For employees of a public school or university, or of a qualified tax-exempt organization such as a church, non-profit hospital or home health service agency.
• Funded by employee salary deferrals.
• Employer may make matching or discretionary contributions.

Tax Benefits

• Salary deferrals reduce an employee's current taxable income.
• Earnings compound tax deferred.

Contribution Limits*

• Between 2006&2007, annual limits on salary deferral contributions for participants under age 50, are scheduled to increase from $15,000 to $15,500.
• Participants who are age 50 or older, can take advantage of additional catch-up deferrals to their 403(b) plans. These catch-up contributions must be made through salary deferrals.
  
  

Retirement Plan Contribution Limits





• Eligible lower income tax payers can claim a tax credit (in addition to any tax deduction that applies) for salary deferral contributions made to the plan, for tax years beginning in 2002 and ending in 2006.

*Contribution limits were established by the Economic Growth and Tax Rate Reconciliation Act of 2001 click here .. Several states have not yet passed legislation to conform their income tax laws with the provisions of the Act, including the increases in benefit and contribution limits. In order to determine whether your state has adopted conforming laws, you should consult us or your tax or financial advisor.

Deadline to Set Up/Contribute

• Employee must make a salary deferral election before plan participation can begin.
• Deferrals made from pay periods between January 1 and December 31 each year are applied toward the maximum amount the employee can defer for that year.