By: Tim Hayes Financial Advisor - posted in: Public School Employees - Last updated Jul 18, 2019

403b and 457 Plans and Catch-Ups

Your school system provides you with a list of 403(b) companies. The 457 is different. The city/town usually provides one company.

Both provide you with a broad range of investment options.

You decide what plan to use and the amount that you want to save before taxes from your paycheck.

In 2019, the basic limit is $19,000, and an educator age fifty or over can save an additional $6,000.

The IRS, however, allows educators to contribute $19,000 to a 403(b) and a 457.*

Also, both plans have unique additional catch-up options.

The 403(b) catch-up allows some public school employees with 15 years of service with the same employer to contribute an additional $3,000 a year for five years.

One problem with this catch-up is any amounts contributed over $18,000 are credited first against the 15-year rule. So, a teacher who is age fifty or above could use up the fifteen-year catch-up without knowing it.*

The 457 plan has a much larger catch-up. It allows eligible employees to contribute $36,000 a year for three years before they reach their “normal retirement date.” *

Both provide a tax-friendly opportunity to build wealth and supplement your state pension.

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July 2019

About Financial Advisor Tim Hayes

Independent Financial Advisor

I am registered with Cambridge Investment Research, Inc., a broker-dealer with over 3,000 Registered Representatives nationwide. Investment Adviser Representative at Cambridge Investment Research Advisors, Inc., a $94B RIA based in Fairfield, IA. I've held an industry securities registration for 26 years and am subject to SEC and FINRA oversight.

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