403b/457b Plans

What is a 403(b) Plan?

A 403(b) is a supplemental retirement plan for public school employees (K-12, Higher Ed), employees of certain 501(c)(3) tax-exempt organizations, and churches.

Many people have heard of 401(k) plans which are available to employees at many private and public companies. Private sector employees typically pay into Social Security. Contributing to a 401(k) plan helps them close the retirement gap they would be left with by depending on only Social Security.

The only difference is where you work! For most public-school employees, the 403b can be used similarly to help make up the retirement income gap left by depending solely on your TRS Pension.

403(b) Highlights:

• 2024 maximum contribution limit to 403(b) is $23,000
• Catch-Up provision of $7,500 for those over 50 can increase limit to $30,500
• Contributions via payroll deduction
• Contributions can be increased, decreased, or stopped at anytime
• Pre-Tax or Roth (after-tax) contributions are permitted¹

What is a 457(b) Plan?

A 457(b) is a supplemental retirement plan for state and local employees. In the Texas K-12 and Higher marketplace the 457(b) is an employer group plan. Many Texas K-12 employers have not yet adopted a 457(b).

If available, the 457(b) is another option public school employees can use to help bridge the retirement income gap. Find out if the Destinations360 457(b) is available at your employer today!

457(b) Highlights:

• 2024 maximum contribution limit to 457(b) is $23,000
• Catch-Up provision of $7,500 for those over 50 can increase limit to $30,500
• Contributions via payroll deduction
• Contributions can be increased, decreased, or stopped at anytime
• Pre-Tax or Roth (after-tax) contributions are permitted¹
• If you retire early or resign from your employer and need to withdrawal funds there is NO 10% penalty fee, unlike 403(b) plans.