|
Home
Retirement
Supplemental
Retirement
403b
403b
A 403(b) is a tax-advantaged retirement program for employees
of educational institutions, and certain other not-for-profit
organizations. 403(b) plans provide an outstanding means
to maximize retirement savings.
The University offers several 403
(b) and Standard Insurance 403(b)(7)
tax deferred investment plans in which eligible employees
may participate. The University does not include any additional
money in these accounts but the plans allow employees to reduce
current taxable income while setting aside funds to supplement
retirement benefits. Taxes on investment earnings are also
deferred, allowing for long-term investment growth. Withdrawals
are taxed as ordinary income, but many retirees find themselves
in a lower tax bracket than when they were working. (A 10%
penalty may apply for early withdrawal)
What is the 403(b) contribution limit?
What is the 403(b) contribution limit?
In 2003 the pre-tax contribution limit is $12,000 and increases
to $15,000 by the year 2006 as shown in the chart below.
Year
|
Regular Contribution
Limit
|
|
2003
|
$12,000
|
|
2004
|
$13,000
|
|
2005
|
$14,000
|
|
2006
|
$15,000
|
After 2006, these contribution limits may be increased to
factor in the effects of inflation.
Catch-up Limits
Making up for lost time
If you're nearing retirement and feel like you're "behind
the eight-ball" with your savings, there are now
two ways for 403(b) participants to catch up. In fact, once
you have contributed the maximum to your 403(b), you could
potentially put away up to $17,000 in 2003 if you qualify
for both of the catch-up provisions summarized below.
Age 50+ Catch-up: You are eligible to make additional
annual "Age 50+ Catch-up" contributions to your
403(b) plan beginning in the year you turn age 50. If you're
already contributing the maximum to your 403(b) plan, you
may be able to use these pre-tax, catch-up contributions to
save even more for retirement. In 2003, the Age 50+ catch-up
contribution limit is $2,000. Between 2004 and 2006, catch-up
contributions are phased in as shown in the chart below.
403(b) Lifetime Catch-up: This is available to employees
who have completed 15 or more years of service. This catch-up
provision allows participants to contribute up to $3,000 in
2003 in addition to the regular contribution limit. To qualify,
you must be a long-term employee who has contributed on average
less than $5,000 a year to your 403(b) plan. The maximum
lifetime limit for this catch-up provision is $15,000. Your
403(b) vender must verify you have not exceeded the contribution
limit to qualify.
403(b) Catch-up Contribution Limits
|
Year
|
Age 50+ Catch-up
|
403(b) Lifetime
Catch-up
|
|
2002
|
$1,000
|
$3,000
|
|
2003
|
$2,000
|
$3,000
|
|
2004
|
$3,000
|
$3,000
|
|
2005
|
$4,000
|
$3,000
|
|
2006
|
$5,000
|
$3,000
|
Coordination of Contributions
Prior to EGTRRA, employees who contributed to both a 403(b)
and a 457(b) plan were limited to a combined maximum contribution
of $8,500. Since January 1, 2002, 457(b) plan participants
have not been required to aggregate the contributions they
make to 403(b) plans. Participants who contribute to a 457(b)
and a 403(b) are allowed to contribute the maximum amount
permissible to both plans. However, maximum combined deferral
when contributing to 403(b) and 401(k) is limited to the yearly
maximum of the regular contribution limit for either plan.
Coordination is required between 403(b) and 401(k).
|
