Planning Briefs
This Plan Is Just For Nonprofits
Published Wednesday, February 1, 2017 at: 7:00 AM EST
If you work for a nonprofit organization—a hospital, school, or government agency, among many other kinds of groups—you can't participate in a 401(k) plan as a way to save for retirement. But not to worry: Many nonprofit employers offer 403(b) plans, which closely resemble 401(k)s and also can help you put away pre-tax dollars to fund your life after work.
Although there are a few important differences between the two kinds of plans, 403(b)s are quite similar to 401(k)s. You contribute to a 403(b) plan account on a pre-tax basis through salary deductions, just as you would fund a 401(k). Your contributions are invested and can grow and compound without being eroded by current taxes. Distributions generally are taxed at ordinary income rates.
Some organizations that offer 403(b)s also may give you the option of contributing to a Roth-type account that uses after-tax dollars for contributions but provides tax-free distributions during retirement.
© 2024 Advisor Products Inc. All Rights Reserved.
More articles
- The Best Places In The Country To Retire
- Using RMDs To Buy Life Insurance
- Convert To A Roth IRA Now To Avoid Higher Taxes Later?
- Federal Estate Tax Reduced, But What About State Taxes?
- Tax Rules For Collectible Donations
- 5 'Other' Retirement Saving Ideas
- New Opportunity For Stand-Alone HRAs
- Online Survey Shows Split In Funding Home Down Payment
- IRS Applies IRA Rollover Limit To Coverdell ESAs
- Swap Munis To Your Tax Advantage
- This Type Of Trust Is A Failure
- What Are The Main Items On Trump's Tax Reform Agenda?
- Set Aside The Funds You Might Need For A Rainy Day
- Why Would You Take Your RMDs Sooner?
- Tax Rewards For Charitable Trusts