Highlights of tax-exempt plans - Select a plan for additional information and resources about that plan.
403(b)
- Can be set up by public education employers and tax-exempt (501(c)(3)) organizations
- Participant's retirement benefits based on participant’s account balance
- Allows employees to contribute to their own retirement through salary deferrals, up to $17,0001 and an additional $5,5001 if age 50 or older
- May allow certain employees with 15 or more years of service to contribute an additional $3,000
- Although not required, the employer can contribute to an employee’s retirement account
- The maximum combined employer and employee contributions are the lesser of 100% of an employee’s includible compensation or $50,0001 or more if catch-up contributions or 15 or more years of service contributions
- Covers almost all employees
- Annual return may be required
- Plan may allow loans and hardship withdrawals
- Immediate vesting in employee's own contributions
457(b) - Government Entities
- Can only be set up by state and local governments
- Participant's retirement benefits based on participant’s account balance
- Allows employees and independent contractors to contribute to their own retirement by deferring compensation, up to $17,0001 and an additional $5,5001 if age 50 or older
- May allow employees and independent contractors to make additional contributions for 3 years prior to normal retirement age
- Plan may allow employer contributions
- The maximum annual contributions are the lesser of 100% of includible compensation or $17,0001 or more if catch-up contributions or additional contributions for 3 years prior to normal retirement age
- May cover all employees and independent contractors
- Plan may allow loans and hardship withdrawals
457(b) - Tax-Exempt Organizations (Non-Church)
- Can only be set up by tax-exempt organizations (non-church)
- Participant's retirement benefits based on participant’s account balance
- Allows select group of management or highly compensated employees and independent contractors to contribute to their own retirement by deferring compensation, up to $17,0001 or more for 3 years prior to normal retirement age
- Plan may allow employer contributions
- The maximum combined contributions are the lesser of 100% of includible compensation or $17,0001 or more for 3 years prior to normal retirement age
- May cover select group of management or highly compensated employees and independent contractors
- No loans are allowed
- All contributions are subject to claims of creditors
1Dollar limits are for 2012 and are subject to cost-of-living adjustments for future years.