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Understand your 403(b)


One way to save for your retirement goals is through your employer-sponsored 403(b) plan which can help you systematically save a portion of your earning in a special account on a pre-tax basis.

When you invest in a 403(b) plan, you can:

  • Lower your income taxes. The dollars you contribute to your 403(b) are generally pre-tax.
  • Grow your money faster. Earnings in your 403(b) are not taxed until withdrawn.
  • Pay yourself first. Regular contributions to your 403(b) are automatically deducted from paycheck, making it more affordable to build your retirement fund by savings incrementally.

2020 Contributions limits:

  • $19,500 for pre-tax contributions
  • $6,500 catch up contributions for participants age 50+ who are contributing the maximum pre-tax amount to the plan
  • $3,000 catch up contributions for participants with 15+ years of service who have maximized his/her other deferral options (lifetime maximum of $15,000)

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What is a 403(b) plan? A 403(b) plan is a retirement account available to employees of public schools, colleges, universities and certain tax-exempt 501© (3) organizations, which may include nonprofit hospitals, religious and charitable organizations, museums, libraries and symphony orchestras.

Make your retirement plan contributions work for you

Save as much as you can afford

It is essential that you consider starting to save early for your retirement. It is also a good idea to consider increasing your contributions as you lifestyle allows.

The cost of waiting to save

One of the secrets to achieving financial security is taking advantage of compounding: the ability of an investment to generate earnings that are then reinvested and generate their own earnings. But the key to compounding is to start saving early and regularly. Here’s how putting off saving could significantly impact your investment potential.

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Will your investments last throughout your lifetime? Will your income keep pace with inflation? Will you have enough to live the life you want? Will you have enough money to pay for rising health care expenses?

Take advantage of tax-deferrals

How you save can be just as important as what you save. Taking advantage of tax-savings vehicles, such as your workplace retirement plan, can help you save more money for your retirement and keep more money in your pocket now.