403(b) and Roth 403(b) Retirement Accounts

403(b) and Roth 403(b) retirement accounts are available to employees of public schools and certain tax-exempt organizations. These plans allow eligible individuals to save for retirement through regular contributions and a range of investment options, subject to employer plan provisions and IRS guidelines.

403(b) Plan Features

Tax Advantages

403(b) plans may offer tax-deferred contribution options, which can help manage current taxable income while saving for retirement, depending on individual circumstances.

Long-Term Saving Structure

Regular contributions to a 403(b) plan provide a structured approach to saving for retirement over time.

Dollar-Cost Averaging

Many plans allow consistent payroll contributions, which may help spread investment activity across different market conditions.

Employer Contributions

Some employers may offer matching or supplemental contributions, based on the specific rules of their retirement plan.

Account Portability

In certain situations, 403(b) accounts may be eligible for rollover or transfer when changing employers or entering retirement, subject to plan and IRS regulations.

Catch-Up Contributions

Eligible participants may be able to make additional contributions beyond standard limits, depending on age, years of service, and IRS rules.

Distribution Options

403(b) plans typically offer multiple distribution options at retirement or separation from service, governed by plan provisions and tax regulations.

Investment Options

Available investment options vary by plan and provider and may include mutual funds and other approved investment vehicles.

Annuities vs. Mutual Funds

Understanding the differences between annuities and mutual funds is a crucial aspect of retirement planning. The video below provides a general overview of how these options may function within retirement accounts.

A brief explanation outlining the general differences between annuities and mutual funds within retirement accounts.

WATCH ANNUITIES VS MUTUAL FUNDS VIDEO

Retirement Planning Guidance

The Legend Group works with individuals and families to help explain retirement planning options, including 403(b) and Roth 403(b) accounts. Our role is to provide guidance and answer questions, enabling clients to make informed decisions based on their individual situations.

An educational overview of how 403(b) plans are commonly used as part of a broader retirement strategy.

12 REASONS TO SAVE FOR RETIREMENT WITH A 403(B)

EDUCATOR & ELIGIBLE EMPLOYEE RETIREMENT GUIDE

This retirement planning guide is designed to help educators and other eligible employees better understand retirement plan options and planning considerations.

Learn more

By making regular contributions to a 403(b)/TSA account, you have a convenient means to enhance your retirement savings as you work toward building your financial future.

How Do 403(b) Plans Operate?

403(b) plans operate based on the provisions established by an employer and the investment options made available through the plan. Participants select contribution amounts and investment options and may adjust their approach over time as circumstances change.

403(b) Investment Options

The employer and plan provider determine investment options within a 403(b) plan. These options may include mutual funds and other approved investment vehicles, depending on plan availability.

Traditional vs. Roth 403(b) Accounts

Traditional 403(b) contributions are typically made on a pre-tax basis, with taxes applied at the time of withdrawal. Roth 403(b) contributions are made with after-tax dollars, and qualified withdrawals may be tax-free, subject to IRS rules. Choosing between these options depends on individual financial circumstances.

Professional Portfolio Management

Through Lincoln Investment, advisors affiliated with The Legend Group may provide guidance on portfolio construction, asset allocation, and periodic review based on an individual’s goals and risk tolerance.

The Legend Group is here to help you as you work toward building your financial future.

We can answer your questions, work with you to develop a viable investment strategy, and assist you in selecting the investment options that may best reflect your needs. Your financial advisor can also provide information about your state retirement plan, and offer ongoing guidance as you work to reach your investment goals. Contact us today to schedule your retirement review.

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^{1. Distributions from a traditional retirement account are subject to ordinary income taxes in the year distributed. Distributions prior to age 59½ may incur an additional 10% penalty.}
^{2. In order for the Roth §403(b) account to be distributed tax-free, it must be funded for a minimum of five years and the account holder must have attained age 59½. A participant would also qualify for tax-free distributions if the account was held for five years and the account owner became disabled (under the strict definition of disability of §72(p) of the IRS code). Furthermore, in the event of the account holder’s death, beneficiaries would receive tax-free distributions if the account was held for at least five years. Otherwise, the distribution would be treated as part return of principal and part taxable earnings. A 10% premature withdrawal penalty may apply to the earnings.}

^{Diversification does not assure a profit or protect against market loss.}

^{All investment options are subject to employer approval.}