Teacher Retirement Plans
403(b) Plan
The 403b plan is a retirement plan offered to non-profit organizations. Very often it is offered as a retirement plan for public school teachers. The plan is a 401k equivalent for teachers, school employees, and other non-profits. The rules and contribution limits for the two plans are similar. Withdrawals cannot be made before the age of fifty-nine and a half. If an early withdrawal is made then there may be a 10% tax penalty.
457 Plan
The 457 plan is a retirement plan offered to government employees. It is often offered to teachers, firefighters, police officers, and other government employees. A 457 plan allows for withdrawals before the age of fifty-nine and a half from participants who have separated from service. These early withdrawals will be made without tax penalty.
FAQs
FAQs: 403(b) Plan
What age can I make a withdrawal from my 403(b) plan without a penalty?
- You can start making withdrawals after you reach the age of 59 and a half. If a withdrawal is made before this then there may be a ten percent tax penalty.
What is the smallest amount I can contribute to my 403(b) plan per month?
- You can start with as little as $25 per month as a contribution to the plan.
When will I start paying taxes on my 403(b) plan?
- You will start paying taxes once you start taking distributions
Who is offered a 403(b) plan?
- Non profit organizations offer 403(b) plans. Education falls under the non-profit category. Here at PFSNH we specialize in teachers 403(b) plans. The 403(b) plan is a common retirement plan offered by school districts to public school teachers.
FAQs: 457 Plan
Will I be charged an early withdrawal fee on my 457 plan?
- No you will not be charged an early withdrawal fee as long as you separate from service with the original provider. A 457 plan will allow participants that have separated from service access to their account without tax penalty.
When do the contributions I have made to my 457 plan start to get taxed?
- Your contributions are not taxed until you withdraw money from the account. You pay taxes during retirement. However, you may have to pay income taxes.