If you work for the government, in a public school or for another organization that is non-profit or exempt from tax, you may qualify for a 403(b) retirement savings plan. When comparing this type of plan to the more widely used 401(k) option, you will notice a lot of similarities. They are essentially the same type of retirement savings account, but they are offered to different groups of employees.

403(b) Plans

There are two types of 403(b) plan: the traditional 403(b) and the Roth 403(b). The latter allows you to make contributions after tax and does not charge a tax fee upon withdrawal.

There are many options for this type of plan, and and some of the best 403(b) plans come from well-known financial services companies such as Fidelity Investments and TIAA.

As with the 401(k), you should not withdraw from your 403(b) account until you are 59- and six-months years of age. It also has the same annual contribution maximum as the 401(k): $19,500 annually for people under 50 years of age and $26,000 for people 50 years of age or older (not including employer contributions). 

You may wish to switch your 403(b) or 401(k) to a Roth IRA. This is known as a “rollover.” To avoid a penalty for your rollover, you must meet one of the following conditions:

  • You are at least 59- and six-months years of age.
  • You no longer work for the employer who sponsored your 403(b) or 401(k).

By Admin