Traditional 403(b) Plan

 

 

 

 

 

 

 

 

Summary of a Traditional 403(b) Plan

 

A 403(b) plan, also known as a tax-sheltered annuity (TSA) plan, is a retirement plan for certain employees of public schools, employees of certain tax-exempt organizations, and certain ministers.

Your 403(b) account can be established in either:

  • An annuity contract, which is a contract provided through an insurance company.
  • A custodial account, which is an account invested in mutual funds.

 

Payroll Deductions into a Traditional pre-tax 403(b) are funded by tax-deductible dollars, taken right off the top of your gross income from your paycheck, as are your mandatory contributions to STRS and PERS.   Because the contributions are taken out before taxes, for most employees, the tax advantage allows them to contribute more towards their retirement than they could otherwise afford, since their contribution amount usually does not affect their net, take-home income by as much as the amount coming out of their gross income.

In 2019, those eligible are allowed to contribute a total of $19,000 per year, or $25,000 if you have attained age 50 by the end of year, as you are then eligible for a $6,000 “catch-up” provision. 

When you retire and begin withdrawing money from your 403(b) account, it will be 100% taxed as ordinary income at your personal tax bracket at that time.  You will be taxed on the amount you withdraw from your 403(b) account each year and will be subject to Required Minimum Distributions (RMD) upon attaining age 70 1/2.  

 

 

For more information please contact:

Stacey Parnum, Registered Rep, CA Insurance Lic.# 0B29425

 

Toll Free:    833-672-7686 

Office:          818-353-5037

Mobile:      661-312-8882

Fax:           818-353-5001

Website:     www.ParnumFinancial.com

Email:         stparnum@planmembersec.com