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403(b) and 457(b)

403(b) + 457(b) gets your employees one step closer to retirement.

You may already offer a 403(b) plan to your employees. If you do, you will want to consider adding a 457(b) plan for eligible employees so that they can choose the plan best suited to their needs and retirement goals. In fact, by participating in both plans, eligible employees can maximize the amount of money that they are saving for retirement. They are being given the choice to contribute either to the 403(b) plan or the 457(b) plan or BOTH plans.

Double the Plans, Double the Benefits

  • Double the contributions - contribute the IRS maximum limit to both plans each year! 
  • Maximize ways to access funds for life’s unforseen challenges. 
  • Participants have more options to choose the plan that’s right for their goals. 
With 457(b) plans, unlike 403(b) programs, there is no requirement for universal availability. Therefore, employers are not required to make the plan equally available to all employees as a condition of the plan offering, but they may choose to do so.


Added Choice = Saving To The Max

Did you know there’s also a Roth option for 403(b) and 457(b) deferred compensation plans? Offering a Roth gives your employees the option to save on an after-tax basis through Roth contributions. The Roth doesn’t change how much they can contribute. It gives them more control over when their contributions — and retirement income — will be subject to income tax.


403(b)457(b)Both
Can begin distributions at 59½ (early distributions subject to 10% IRS penalty tax) while still employed.Distributions do not begin until age 70½ while still employed.

At separation from service distributions can be taken as a lump sum, periodic payments, or rolled to a new employer’s plan without 10% IRS early distribution penalty, regardless of age.
Contributions are not aggregated-contribute maximum amount to both plans

Catch-up provisions to save even more closer to retirement

Monies can be accessed after Separation from Service. Taxes and penalties may apply.
Can provide distributions for primary home purchase and college tuition2Can provide distributions for impending foreclosure2Can provide distributions for unexpected medical, disability or funeral expenses.2

Loans available3
Subject to Universal Availability rulesCan be restricted to highly compensated employees, such as Administrators & CoachesTax-deferred retirement savings and reduction of taxable income.4
1 Must meet IRS guidelines to take a distribution from Roth 457(b) Plan.
2 Hardship & Unforeseen Emergency distributions dependent on Plan rules, taxes and penalties may apply.
3 Loans dependent on Plan rules.
4 Taxes due at time of distribution.

Outliving their savings is a major fear for many older Americans.

Don’t outlast your Money.

People are living longer. Most 62-year-olds will live at least another 20 years. Many will live another 30 years. School District employees depend on payouts from their state teacher retirement system to be the cornerstone of their retirement income. However, these plans will not replace 100% of pre-retirement income. Will your retirement income cover your ever-increasing retirement expenses?


Beware of the RETIREMENT INCOME GAP

Annuities help guarantee people won’t outlast their money. An annuity policy coupled with a guaranteed5 lifetime income rider can provide a guaranteed paycheck for life.


 

 

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