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Categories: Retirement Tax Planning

403(b) Plans are retirement savings plans specifically designed for employees of public schools, certain non-profit organizations, and some government entities.

These plans allow participants to make pre-tax contributions through payroll deductions, which can grow tax-deferred until withdrawal. Employers may also contribute, either through matching contributions or non-elective contributions. The funds in a 403(b) plan can be invested in various options, including mutual funds, annuities, and other investment products.

Withdrawals made before age 59½ may incur a 10% early withdrawal penalty, in addition to regular income tax. Upon reaching retirement age, participants can take distributions as needed, often in a lump sum or as periodic payments.

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