403(b)

A 403(b) plan (also called a Tax-Sheltered Annuity or TSA) is a retirement savings plan for employees of public schools, tax-exempt organizations, and certain ministers. It functions similarly to a 401(k) but is designed for the non-profit sector.

2026 Contribution Limits:

Category	Limit
Employee Contribution	$24,500
Catch-up (50+)	$7,500 additional
15-Year Service Rule	Up to $3,000 extra
Total Maximum	$35,000+ potential

Types of 403(b) Plans:

Type	Investment Options	Fees
Annuity Contracts	Fixed/Variable annuities	Often higher
Custodial Accounts	Mutual funds	Generally lower

Key Features:

• Pre-tax contributions reduce taxable income
• Tax-deferred growth until withdrawal
• Many employers offer matching contributions
• Roth 403(b) option available for after-tax contributions
• 15-Year Service Rule: Unique to 403(b) - allows additional $3,000/year contribution if you've worked 15+ years for the same employer

403(b) vs 401(k):

Feature	403(b)	401(k)
Employer Type	Non-profit/schools	For-profit
Contribution Limits	Same	Same
Investment Options	Often limited	Usually broader
Fees	Often higher	Varies
15-Year Rule	Yes	No

Best Practices:

• Always get employer match if offered
• Compare fees between plan providers
• Consider Roth 403(b) if expecting higher future taxes
• Utilize 15-year rule if eligible