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A retirement investment plan for employees of certain non-profit organizations in which a contributor defers taxation on contributions until after withdrawal. Under a traditional 403(b), a worker places a portion of his/her pre-tax income into a 403(b) account and allows it to be invested. Taxation is deferred until withdrawal from the account, generally after retirement. 403(b)s are employee benefits, and workers must have a sponsoring employer such as a public school or a church in order to take advantage of one. They are the non-profit worker's equivalent of a 401(k).
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


A 403(b) plan, sometimes known as a tax-sheltered annuity (TSA) or a tax-deferred annuity (TDA), is an employer sponsored retirement savings plan for employees of not-for-profit organizations, such as colleges, hospitals, foundations, and cultural institutions.

Some employers offer 403(b) plans as a supplement to -- rather than a replacement for -- defined benefit pensions. Others offer them as the organization's only retirement plan.

Your contributions to a traditional 403(b) are tax deductible, and any earnings are tax deferred. Contributions to a Roth 403(b) are made with after-tax dollars, but the withdrawals are tax free if the account has been open at least five years and you're 59 1/2 or older.

There's an annual contribution limit, but you can add an additional catch-up contribution if you're 50 or older.

With a 403(b), you are responsible for making your own investment decisions by choosing from among investment alternatives offered by the plan. You can roll over your assets to another employer's plan or an IRA when you leave your job, or to an IRA when you retire.

You may withdraw without penalty once you reach 59 1/2, or sometimes earlier if you retire. You must begin required withdrawals by April 1 of the year following the year you turn 70 1/2 unless you are still working. In that case, you can postpone withdrawals until April 1 following the year you retire.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
You don't want to risk here your 401K or your 403B to your business acumen.
Additionally, schools may want to adopt an opt-out policy for retirement savings, where all employees are automatically enrolled in retirement savings accounts (generally 403b plans).
You can save using both pre-tax methods such as a 401K, 403B or traditional IRAs, and after-tax accounts such as Roth IRAs or individual accounts.
"Start saving when you are young and take advantage of your employers' benefits, such as your 403b or your 401k," said Kim Calloway of Cypress, Ca., who shared her perspective for Lincoln Financial's video.
The legislature can start by providing a 401(k) or 403b defined contribution plan for our new state workers so that future pension liabilities are a known quantity.
* Retirement Assets: IRAs, 401(k), 403b, 401a (this depends on where they or their spouse worked).
One early medieval child, aged around 1.5 years, was contained within a charcoal burial (B113) suggesting a high status, and eight children were located within the church, probably representing children of wealthy parishioners (B170, 171, 370, 384, 398, 403b, 349, and 155).
Press, 1998), 90, 125, 127, 138; ME, "Modem German Music," Leader 5 (April 29, 1854): 403b (attributed to ME [Letters, II:150 n.
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