The 403(b) plan is a tax-advantaged retirement savings plan available to whom?
A 403(b) plan, also known as a tax-sheltered annuity (TSA) plan, is a retirement plan for certain employees of public schools, employees of certain tax-exempt organizations and certain ministers. Both employers and employees can contribute to this plan. Individual accounts in a 403(b) plan can be any of the following types: Show
What are the benefits of contributing to a 403(b) plan?There are three benefits to contributing to a 403(b) plan:
Who can participate in a 403(b) plan?Any eligible employee can participate in a 403(b) plan. Eligible employees – The following employees are eligible to participate in a 403(b) plan:
Ministers – The following ministers are eligible employees for whom a 403(b) account can be established:
Example: A minister employed as a chaplain by a state-run prison and a chaplain in the U.S. Armed Forces are eligible employees because their employers are not section 501(c)(3) organizations and they are employed as ministers. Who can set up a 403(b) account?You cannot set up your own 403(b) account. Only employers can set up 403(b) accounts. A self-employed minister cannot set up a 403(b) account for his or her benefit. If you are a self-employed minister, only the organization (denomination) with which you are associated can set up an account for your benefit. How can contributions be made to my 403(b) account?Generally, only your employer can make contributions to your 403(b) account. However, some plans will allow you to make after-tax contributions (defined later). The following types of contributions can be made to 403(b) accounts:
Self-employed minister – If you are a self-employed minister, you are considered both an employee and an employer, and you can contribute to a retirement income account for your own benefit. Do I report contributions on my tax return?Generally, you do not report contributions to your 403(b) account (except Roth contributions) on your tax return. Your employer will report contributions on your Form W-2. Elective deferrals will be shown in box 12 and the Retirement plan box will be checked. Self-employed ministers – If you are a self-employed minister, you must report the total contributions as a deduction on your tax return. Deduct your contributions on line 28 of Form 1040. Chaplains – If you are a chaplain and your employer does not exclude contributions made to your 403(b) account from your earned income, you may be able to take a deduction for those contributions on your tax return. However, if your employer has agreed to exclude the contributions from your earned income, you will not be allowed a deduction on your tax return. If you can take a deduction, include your contributions on line 36 of Form 1040. Enter the amount of your deduction and write “403(b)” on the dotted line next to line 36. How much can be contributed to my 403(b) account?There are limits on the amount of contributions that can be made to your 403(b) account each year. If contributions made to your 403(b) account are more than these contribution limits, penalties may apply. To determine the maximum amount you may contribute to your 403(b) account see: www.irs.gov/publications/p571/ch02.html. For more information: www.irs.gov We’re here to help! Contact Sentinel Benefits & Financial Group for the guidance you need. This article is not intended to be exhaustive nor should any discussion be construed as legal or financial advice. Who is eligible to contribute to a 403b plan quizlet?B) 403(b). Employees of the public school system are eligible to participate in a 403(b) retirement plan. This plan offers the opportunity to contribute far more than could be contributed to an IRA. A) distributions before age 59-½ are normally subject to penalty.
What is an advantage of a 403 B quizlet?A) the employer may make unlimited contributions, which generate unlimited tax deductions for the business. B) tax deferral on the plan earnings is advantageous to employees. C) the owner of the business may participate in the plan.
Which investment is not eligible for a 403 B plan?Investment options available in 403(b) plans are somewhat more limited than other tax-advantaged retirement plans. You generally can choose from mutual funds and annuities. Unlike 401(k)s, you typically cannot invest individual stocks, exchange-traded funds (ETFs), or real estate investment trusts (REITs).
Is a 403 B tax deferred retirement plan?A 403(b) plan is a type of tax-deferred retirement plan that is similar to the 401(k) plans offered by many employers. Most contributions to a 403(b) plan are tax-deductible.
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