403(b) Plans

What is a 403(b) Plan?

The 403(b) plan is a special qualified employer sponsored retirement plan which is designed and administered exclusively for the following organizations:

  • Non-profit hospitals and non-profit health care organizations

  • 501(c)(3) designation charitable organizations and foundations

  • Scientific and research organizations which are non-profit

  • Churches and other religious organizations

  • Non-profit Educational institutions: Private Schools, Colleges, Public Schools

Employee contributions into a traditional 403(b) are pre-tax, tax deferred and deducted from gross income on the employees W-2.

The employee's taxable income is reduced by the total amount of pre-tax 403(b) contributions for the year and recorded as a tax-deduction on the employee’s tax return.

The pre-tax assets grow tax-deferred inside the traditional 403(b) and are taxed as ordinary income when distributions start. 

To learn more about the tax considerations 403(b) distributions, see our tax planning section:

Roth 403(b):

Employee contributions into a Roth 403(b) are on an after-tax basis and not deducted from taxable income.

The after-tax assets grow potentially tax-free inside the Roth 403(b), you must take a qualified withdrawal or distribution.

The contribution limits for the Roth are the same for the traditional 403(b).

To learn more about the tax considerations of 403(b) withdrawals and distributions, please our tax planning section:

Eligibility to Contribute:

Employee eligibility requirements such as age and length of employment are determined by the 403(b)-plan administrator and company when the plan adoption documents are established.

  • Note: The 403(b)-plan adoption document or agreement can be edited to make updated to the employee eligibility requirements.

Maximum Annual Contribution:

The 403(b) maximum annual contributions are the same as the 401(k) maximum contribution limits.

  • Employer: Profit sharing and match: Up to the lesser of 25% of compensation or $61,000 including employee contributions for 2022.

  • Employee (Salary Deferral): Up to the lesser of 100% of compensation or for a maximum of $20,500 ($27,000 if age 50 or older) for 2022

The total combination of employer and employee (salary deferral) contributions may not exceed $61,000 ($67,500 if age 50 or older) for 2022.