403(b) Retirement Plan: Who Qualifies and What You Get
Learn how employees of non-profit organizations and churches can use 403(b) plans to build tax-deferred savings for their retirement.
A 403(b) retirement plan is a way for employees of specific non-profit organizations to save money for their future while reducing their current tax burden.
Who it's for
This plan is available to employees working for 501(c)(3) organizations. This includes people working for various non-profit groups as well as those working in churches.
What you get
You get the ability to build savings for your retirement through tax-deferred contributions. This means the money you put into the plan is taken out of your paycheck before taxes are calculated, which can lower your taxable income.
What it costs you
To participate, you must enter into a salary reduction agreement with your organization's board. This means you agree to have a portion of your pay automatically diverted into your retirement account.
The catch to know
If you are a member of the clergy, there are special "catch-up" contribution rules that may apply to how much you can save. You should check these specific regulations to understand how they affect your personal savings limits.
How to apply
- Confirm that your employer is a 501(c)(3) organization.
- Speak with your organization's board or administrative office.
- Sign a salary reduction agreement to authorize your contributions.
- Consult with a financial advisor to manage your specific tax status.