403(b) PLANS

403(b)s are retirement savings plans which allow employee contributions to grow tax-deferred until withdrawn at retirement, much like a 401(k) plan. These plans are designed for employees of eligible tax-exempt organizations, including:

• Public education institutions: Schools, colleges and universities
• Churches or church-related organizations
• 501(3)(c) tax-exempt organizations, such as:
  • Nonprofit hospitals
  • Social and welfare organizations
  • Museums and others

Sometimes called tax-sheltered annuities, tax-deferred annuities or tax-sheltered custodial accounts, 403(b)s are offered through an employer and the contributions are withheld from from paychecks before taxes. Because the money is withheld pre-tax, taxable income is lower and the employee's tax burden is decreased.