403(b) Plans

For employees of public schools, colleges, universities, hospitals, and nonprofit organizations

Your Contributions Limits

In 2011 you can contribute up to $16,500 (or 100% of your compensation, if less).

You can increase or decrease the amount you contribute to the plan as often as your employer allows.

Catch-up Contributions
(if permitted under your employer’s plan)

If you are age 50 or older, you may be eligible to contribute an additional $5,500 in 2011.

If you have 15 or more years of service with the same employer, you may also be able to make catch-up contributions. Refer to your employer’s plan summary for details.

Account Consolidation

If permitted under your current and prior employers’ plans, you can transfer your vested account balance from a prior employer’s retirement plan to your current employer’s plan. This can make it easier for you to track your retirement savings and maintain a suitably diversified investment portfolio. Always make sure that you find out what, if any, surrender charges may apply before you initiate a transfer.

Vesting Status

You are always 100% vested in your own contributions, transferred and rollover contributions, and any earnings they generate.

Withdrawals and Distributions

Generally not available before age 59½ unless you terminate employment, have a financial hardship, are disabled, or die. Amounts distributed are taxable as ordinary income and, if taken before age 59½, may incur a 10% federal income tax penalty.*

You must begin taking distributions when you reach age 70½ or leave the employer sponsoring the plan, whichever occurs later.

Other Plan Features

Availability of employer contributions, the Roth 403(b) option, loans, and hardship withdrawals varies by plan. Check your employer’s plan summary to see if these features are offered.

Learn More

About your employer’s 403(b) plan: refer to your employer’s 403(b) plan summary.

About 403(b) plans in general: refer to IRS Publication 571, http://www.irs.gov/publications/p571/index.html.

* If your employer’s plan permits Roth 403(b) contributions, note that distributions of Roth 403(b) contributions are tax-free; distributions of earnings on Roth 403(b) contributions are also exempt from federal (and possibly state) income taxes if certain conditions are met. Refer to your employer’s 403(b) plan summary for details.