403(b) Plans

403B Retirement PlansIn simplest terms, within non-profit organizations, 403(b) plans serve the same role that 401(k) plans do within for-profit companies.

403(b) plans have become an important tool for attracting and retaining employees for schools, religious organizations, and other tax-exempt groups.

Although most 403(b) plans involve both employee and employer contributions, employees can benefit even if the employer does not contribute. Employees voluntarily elect to make pre-tax contributions through payroll deductions up to an annual maximum limit.

To provide added benefit and encourage greater participation, employers often match some portion of the amount deferred by each employee. These matching programs can be set up nearly however the employer wishes, as long as the predetermined percentages are consistently followed. Employers can match 100% for the first 4% deferred by the employee, 50% for the first 5%, 25% for the first 10%, etc.

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