What Is A 403(b) Plan?

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What Is A 403(b) Plan?

People are living longer nowadays, which means that it is more important than ever to get aggressive about saving for the future. While everyone’s vision for retirement varies, there is still an underlying need for basic expenditures. The cost of living is steadily increasing and as most people approach retirement, they are stunned when their new normal is a reduced fixed income.

Not choosing the best retirement plan and saving now could cost you peace of mind in the future. So let’s get our financial Zen on!

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When most people hear the words “retirement plan”, their minds immediately go to a 401k plan. While it is the most talked about, it certainly is not the only option for retirement. Today, I’d like to introduce you to the 403(b) plan. A 403(b) plan is a retirement plan offered to employees of tax-exempt organizations that fall under the code 501(c)(3), like schools, churches, and hospitals. If you are eligible to participate, I would highly recommend that you do.

ADVANTAGES of a 403(b) Plan

1. Your contributions toward your 403(b) are pre-taxed. Meaning your contribution reduces your current income and the amount you owe in current income taxes.

2. All contributions and earnings are tax deferred, which presents you with tax savings since most people are in a lower tax bracket at the time of retirement. This is another instance where time is on your side because the sooner you start to make contributions, the faster your money will grow.

3. Similar to a 401k, employers are able to match contributions. 403(b) contributions must be made through a salary reduction agreement with an employer, even though your company does not directly administer them.

4. Hardship withdrawals can be made.  While hardship withdrawals can be made, I would highly recommend  this as a last resort option.  You must prove that you are experiencing extreme financial distress and the money must be used to cover expenses such as medical bills, tuition fees, or in the event of an eviction or foreclosure.  Just remember that you are only allowed to withdraw the exact amount needed and that the money will be taxed as income.


People who are eligible for this type of retirement plan are ones who make a living being of service to others.  If you qualify for a 403(b), be of service to yourself and your financial future, by getting serious about your plans for retirement.  They say the older you get, the faster time passes.  Don’t miss out on your opportunity to make time and youth work for you.

Danielle Y. Boler is  an Atlanta blogger and The She of She Makes Cents. She Makes Cents is a chic, fun, and sassy money saving site that transforms and inspires ways to use your "cents" to live a fab life while working toward financial freedom.  If you’re interested in saving money on the things that make you you, then this is your one stop shop. The team over here at She Makes Cents presents information and inspiration on topics such as career, fashion, lifestyle, and of course finances for the budget conscious reader.  Not sure how to begin to save money, make a major purchase on your budget, or get out of debt– learn how we did it and follow us on our journey as we, too, strive to accomplish our financial goals.  Follow me on my journey to accomplish my financial goals and more.



Email SMC: shemakescents@gmail.com