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403(b) Plan Limits 2014

Contribution Limits for 403(b) Retirement Plans in 2014


People employed at nonprofits or 501(c)(3) organizations have access to a 403(b) defined contribution plan. In fact, nonprofit organizations must offer 403(b) plans to employees. These plans are kind of like 401(k)s for the nonprofit set. So how much can you put into your 403(b) in 2014?

Contribution Limits for 403(b) Plans in 2014

In general, you can contribute as much as $17,500 to a 403(b) plan in 2014. This amount did not change from 2013. If you are age 50 or older, you may also qualify for an additional catch-up contribution of $5,500, for a total potential contribution of $23,000 in 2014. Be aware that these are guidelines, but your company's plan may differ slightly. If you have an employer matching program at work, you can contribute much more.

Roth 403(b) Contribution Limits for 2014

Roth 403(b)s work like Roth 401(k)s, which are different than traditional 401(k)s. With Roth 403(b) your contributions are made after-tax instead of pre-tax, but then generally not taxed again at retirement. The contribution limits for a Roth 403(b) are similar to traditional 403(b) plans in 2014: $17,500 plus $5,500 for those 50 or older.


403(b) Plan Basics

If you aren't quite sure how 403(b) plans work, read on. Known also as TSA or tax-sheltered annuity plans, 403(b)s used to invest solely in annuity contracts. In the mid-1970s, the plans began offering the types of investment choices in custodial accounts, just you might find in another retirement plan, like a 401(k) or IRA. You may still hear a 403(b) referred to as a TSA, but these days it will more closely resemble a 401(k).

A 403(b) is similar to a 401(k) in other ways as well. Contributions are made through your paycheck on a pre-tax basis. The investments in the plan grow tax deferred until retirement after age 59 1/2. If the money is withdrawn before that, you pay taxes and will likely be subject to an additional 10% penalty. You may also be able to take out a 403(b) loan, depending on what your employer offers.

Max Out Your 2014 403(b) Contributions

If you want to be a 403(b) overachiever, you should aim to contribute up to the maximum amount each year. If that seems lofty, try for 10% or as much as your employer will match. Then increase your contributions over time with salary increases and bonuses. Even if you are a non-profit type, you'll likely be pleased with the profits you can amass over time.

The content on this site is provided for information and discussion purposes only. It is not intended to be professional financial advice and should not be the sole basis for your investment or tax planning decisions. Under no circumstances does this information represent a recommendation to buy or sell securities.

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