403b Retirement Programs

A 403(b) plan is a retirement savings tool that is available to millions of employees of nonprofit corporations, schools and churches.  

Similar to 401(k) plans, which are available to employees of private-sector companies, 403(b) plans allow individuals to make salary deferral contributions that are usually limited by regulatory caps.  Contributions are made with pre-tax money, and grow tax-deferred until the money is withdrawn.

Withdrawals taken before age 59 1/2 generally face a 10% penalty plus tax, with a few exceptions.  Withdrawls taken after age 59 1/2 are penalty-free.

What Can You Invest the Money in?

In 1974, Congress opened the door for 403(b) plans to offer a variety of investments.  Before this time, all 403(b) accounts were required to be invested in annuities. Because of that, the term TSA, or tax-sheltered annuity, became a synonym for 403(b) plans in the popular jargon.