403(b) Plans

Helping your employees achieve financial security, no matter where they’re starting from

A 403(b) plan is a retirement plan for employees of certain tax-exempt organizations, such as public schools and nonprofit organizations like health services facilities, libraries and churches.

A 403(b) is similar to the more common 401(k) that’s available to the private sector. It allows your employees to make pre-tax contributions into their individual accounts to help them prepare for retirement. Your organization can also make contributions to the plan for the benefit of your employees.

Tax-advantaged benefits

Aside from the obvious benefit of putting money into a retirement nest egg, the biggest benefit of a 403(b) plan is taxes. Here’s why:

• Participants don’t pay taxes on allowable contributions because the contributions are made on a pre-tax basis. That can reduce their tax bills. Taxes will be due when the money is withdrawn, but they may be in lower tax brackets when they begin taking distributions.
  
  
• The earnings that accumulate in the 403(b) grow tax-deferred. No taxes are paid until the money is withdrawn.

Contributions

Like most retirement plans, there are limits on how much can be contributed each year. Those limits are reviewed annually by the IRS and, if deemed appropriate, increased. Like 401(k) plans, individuals who are age 50 and older can make a “catch-up” contribution. In addition, some qualifying organizations can make a special 403(b) catch-up contribution for employees with at least 15 years of service.

Contributions to the plan are always 100% vested, and if participants change jobs or stop working, they have several options of what to do with 403(b) contributions plus the vested amount of employer contributions.

Distributions

While the money in the 403(b) is earmarked for retirement, there are other events that allow distribution from the plan without penalty. Participants can take penalty-free distributions due to:

• reaching age 59 ½
• severance from employment
• death (beneficiary distribution)
• becoming disabled
• financial hardship (salary reduction contribution portion only)

Count on COUNTRY

There are a lot of aspects to a 403(b) plan, and COUNTRY is here to make it easy for you to offer this type of plan to your employees. Why not put our experience and financial strength to work for you? Give me a call to find out more.