Tax Exempt Plans

403(b)

A 403(b) tax-sheltered annuity plan is available to public schools, colleges and universities, churches, public hospitals and certain tax-exempt charitable organizations. Generally, this plan is funded by employee contributions.  

To set up a 403(b) plan, you may purchase a pre-approved plan or consult a benefit plan advisor.

403(b) Tax-Sheltered Annuity Plan for Sponsor (.pdf file)

 

 

 
  • 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 
  • Greater design flexibility
  • Plan may allow employees to take loans and hardship withdrawals
  • Immediate vesting in employee's own contributions
1Dollar limits are for 2012 and are subject to cost-of-living adjustments for future years.

403(b) Plan Checklist (.pdf file)

 

 

 

Correcting Plan Errors on IRS.gov

 

 

 

 ADDITIONAL RESOURCES