403(b) Defined Contribution Plans

Contact us for more information

For Plan Sponsor or Consultant inquiries, contact 403binfo@icmarc.org.

If you’re an ICMA-RC participant, contact your local ICMA-RC representative.

A 403(b) Retirement Savings Plan allows you to save and invest money for retirement with tax benefits.

Contributions are made to an account in your name for the exclusive benefit of you and your beneficiaries. The value of the account is based on the contributions made and the investment performance over time. No taxes are due, including on earnings, until you make withdrawals.

A 403(b) plan is designed to supplement your retirement income. While a pension and/or Social Security may go a long way, they are unlikely to be enough. Saving to your 403(b) plan can help you maintain your desired standard of living .

You may participate in a 403(b) plan and a 457 deferred compensation plan. Both plans work together to help you build a secure retirement.

Contributions

You may choose to defer money from your paycheck and put it into a 403(b) plan. You can voluntarily contribute up to100% of your annual compensation on a pre-tax basis*. If you're over age 50, you may able to take advantage of "catch-up provisions" and save even more.

Your employer may also contribute on your behalf. Contributions your employer makes are typically a fixed dollar or percentage amount, or a match of your contributions.

Your employer's contributions may have a vesting schedule, which determines your "ownership" of those contributions and associated earnings and how much of your account may be paid to you when you separate from service. (You always fully own your contributions and associated earnings.)

*IRS rules limit the total contributions that can be made to your account, including both your employer's and your contributions. See Contribution limits for the current calendar year.

Investments

You control how your account is invested, choosing from options selected by your employer.

A typical plan includes a wide range of options, from more conservative stable value funds to more aggressive bond and stock funds. You may choose to build a diversified portfolio of various funds, select a simple yet diversified target-date or target-risk fund, or rely on specific investment advice through Guided Pathways.

If you have several 403(b) plans to choose from, be sure to evaluate each one carefully. There are often significant differences in plan design - especially related to fees and expenses. Over time, plans with higher fees will diminish your retirement assets. Be sure to look for a plan that allows you to diversify beyond fixed rate investments since mutual funds and other variable rate investments offer higher potential for growth over time.

  • To review investment options for your plan, login to your account.
  • To learn more about investing for retirement, visit www.icmarc.org/invest.

Withdrawals

When you leave employment, you are eligible to withdraw money from your account as you see fit, but you are generally not required to take payments until after age 70½. You have the flexibility to take money as needed, including the ability to have payments automatically deposited to your bank account every month. Payments are generally subject to taxes and an IRS-imposed 10% early withdrawal penalty may apply to payments taken prior to age 59½.

While you are employed, the available withdrawal options are limited and vary by plan. The available options may include the ability to withdraw voluntary after-tax contributions at any time or to withdraw money after you reach a certain age (e.g., 59½, 70½, or the plan's Normal Retirement Age). You may also have the ability to take a loan from your account.

Have a plan for taking withdrawals from your account  both to manage the tax bill and to provide for your future needs. Retirement Specialists and CERTIFIED FINANCIAL PLANNERTM professionals are available to provide guidance. For more information view the Special Tax Notice Regarding Plan Payments.

Survivor Benefits

You designate a beneficiary, or beneficiaries, to receive any remaining assets upon your death. Designating beneficiaries can help ensure your assets are paid per your wishes, avoid the potential costs and delays of probate, and allow non-spouse beneficiaries to receive additional tax benefits.

Note: if you are married, most plans require that your spouse be your beneficiary for 100 percent of your account unless your spouse waives this right.

Return to top