{ "presentation": "complete-card", "format_version": 3, "overview": "403(b), 457(b) and the Thrift Savings Plan (TSP) are U.S. workplace retirement savings plans with tax advantages. Their investments, costs, employer contributions and rules for getting money out can differ sharply.", "overview_sources": "IRS · Publication 17 (2025)", "overview_source_ids": [ "money59-four-oh-three-b-457-plan-identity" ], "sections": [ { "role": "explanation", "title": "Which plan is it, and how does saving work?", "items": [ { "label": "403(b): schools, eligible nonprofits and certain ministers.", "text": "Employers offer fund accounts or annuities, insurance contracts with their own costs and payment terms. The 403(b) name describes the retirement arrangement, not a specific investment.", "source": "IRS · Publication 571 (2026)", "source_ids": [ "money59-four-oh-three-b-457-403b-basics" ] }, { "label": "457(b): first identify the employer type.", "text": "Governmental plans differ from nonprofit plans, including some hospital plans. Nongovernmental versions cover selected managers/high earners and lack age-50 catch-ups. Confirm 457(b); 457(f) has different rules.", "source": "IRS · 457(b)", "source_ids": [ "money59-four-oh-three-b-457-nongovernmental" ] }, { "label": "TSP: federal civilian and uniformed-service saving.", "text": "It supplements a pension. Core funds hold stocks, bonds or government securities; Lifecycle (L) funds blend them. Payroll amounts and investment choices are separate decisions.", "source": "U.S. Government Manual · TSP", "source_ids": [ "money59-four-oh-three-b-457-tsp-identity" ] }, { "label": "Enrollment directs future pay into the account.", "text": "Enrollment involves checking eligibility and providers, opening the account, choosing investments, and submitting a payroll election (salary reduction agreement). Moving existing savings needs separate paperwork.", "source": "403bwise · Enrollment", "source_ids": [ "money59-four-oh-three-b-457-403b-enrollment" ] }, { "label": "2026 basic cap: $24,500.", "text": "For 403(b), governmental 457(b) and TSP, eligible age-50 catch-ups add $8,000; ages 60–63 add $11,250 instead, if permitted.", "source": "IRS · 2026 limits", "source_ids": [ "money59-four-oh-three-b-457-2026-limits" ] }, { "label": "A 457(b) can provide a separate saving limit.", "text": "403(b), TSP and 401(k) share the employee-deferral cap across jobs. A 457(b)'s separate cap includes employer contributions. Available pay and plan terms can limit amounts.", "source": "IRS · Multiple plans", "source_ids": [ "money59-four-oh-three-b-457-separate-limit" ] } ] }, { "role": "benefits", "title": "What these plans can offer", "items": [ { "label": "Traditional and Roth change when tax is paid.", "text": "Traditional contributions generally defer income tax until withdrawal. Roth, where available, is taxed now; only qualified withdrawals are tax-free. Neither tax choice guarantees investment growth.", "source": "IRS · Publication 571 (2026)", "source_ids": [ "money59-four-oh-three-b-457-403b-basics" ] }, { "label": "Workplace matching can add to contributions.", "text": "Eligible federal civilian and military participants receive TSP matching each pay period. Maxing out early can stop later matching. Enrollment materials explain the formula and when employer money becomes yours.", "source": "TSP · 2026 payroll", "source_ids": [ "money59-four-oh-three-b-457-tsp-payroll" ] }, { "label": "Governmental 457(b) can help bridge an earlier retirement.", "text": "Leaving the job can permit withdrawals without the extra 10% early-distribution tax. Ordinary income tax can remain; money rolled in from another plan type or IRA has different treatment.", "source": "IRS · Early distributions", "source_ids": [ "money59-four-oh-three-b-457-early-access" ] } ] }, { "role": "cautions", "title": "Good to know", "items": [ { "label": "A fund's expense ratio is not the whole bill.", "text": "An expense ratio covers a fund's annual operating costs. Plans can add administrative charges; annuities may add insurance fees and surrender charges for leaving early. Compare the actual contract's fee schedule.", "source": "GAO · 403(b) fees (2022)", "source_ids": [ "money59-four-oh-three-b-457-403b-fees" ] }, { "label": "Nongovernmental 457(b) money remains employer property.", "text": "Employer creditors can claim it, even in a trust set aside for employees. There is no Roth option or IRA/qualified-plan rollover. Leaving may trigger a deadline for choosing taxable payouts; permissible transfers depend on the document.", "source": "IRS · Nongovernmental 457(b)", "source_ids": [ "money59-four-oh-three-b-457-nongovernmental" ] }, { "label": "2026 higher-earner age catch-ups must be Roth.", "text": "This applies above $150,000 in 2025 sponsor FICA wages, the wages used for Social Security tax, rather than household income. Without Roth, affected participants cannot make age-based catch-ups. Payroll confirms implementation.", "source": "IRS · Roth catch-up final rule", "source_ids": [ "money59-four-oh-three-b-457-roth-final-rule" ] }, { "label": "403(b) limits also depend on employer money and service.", "text": "In 2026, employee-plus-employer additions are generally capped at the lower of $72,000 or includible compensation, excluding age catch-ups. Fifteen years with the same eligible employer may allow up to $3,000 extra, subject to a $15,000 lifetime allowance and prior-deferral formula.", "source": "IRS · 403(b) limits (2026)", "source_ids": [ "money59-four-oh-three-b-457-403b-limits" ] }, { "label": "The special 457(b) catch-up uses past unused room.", "text": "If permitted, it applies during the three tax years before the plan's normal retirement age. A governmental plan allows this or its age-based catch-up, whichever is larger, not both.", "source": "IRS · Nongovernmental 457(b)", "source_ids": [ "money59-four-oh-three-b-457-nongovernmental" ] }, { "label": "These accounts are not unrestricted cash.", "text": "403(b) and TSP early withdrawals generally face an additional 10% tax unless an exception applies. Changing investments or paying an annuity's surrender charge does not itself create permission to withdraw.", "source": "IRS · Early distributions", "source_ids": [ "money59-four-oh-three-b-457-early-access" ] } ] }, { "role": "community", "title": "From community discussion", "items": [ { "label": "A teacher's $13,700 account had a $561 exit quote.", "text": "The AXA/Equitable caller reported another $9 transfer fee. Six years ran from the March 2021 last contribution to March 2027, not the January 2019 opening. A 10% partial transfer was quoted at $65 each time: a contract-specific dilemma.", "source": "Community · Reddit", "source_ids": [ "money59-four-oh-three-b-457-teacher-contract" ] }, { "label": "An annuity buyer could not withdraw just to change investments.", "text": "A ValuTeachers/National Life Group customer said the sales pitch linked returns to a stock index with protection from losses. They then found none of the listed withdrawal reasons applied. The pitch did not explain the access restriction.", "source": "Community · Reddit", "source_ids": [ "money59-four-oh-three-b-457-teacher-contract" ] }, { "label": "The teacher narrowed a blanket vendor warning.", "text": "The teacher revised the warning: Lincoln, Voya and VALIC costs depended on the arrangement; TIAA was not automatically cheap. A reply reported inexpensive Lincoln options. The edit suggested investigating a self-directed brokerage option where offered and limited its scope to teacher plans.", "source": "Community · Reddit", "source_ids": [ "money59-four-oh-three-b-457-teacher-contract" ] }, { "label": "Hospital and school employees compare two contribution decisions.", "text": "Reports weigh a matched 403(b) against extra 457(b) room and cheaper menus against insurance-heavy ones. New payroll elections and old-annuity exit costs are distinct. TSP's inexpensive-fund reputation appears in these comparisons.", "source": "Community", "provenance": "preserved-community-record" }, { "label": "Hospital payout flexibility varied sharply.", "text": "One poster described 2–15-year installments and one later election change. A respondent saved for a decade, changed jobs and faced a lump sum with a tax hit. Another reported a hospital-to-hospital transfer: different contracts produced different options.", "source": "Community · Reddit", "source_ids": [ "money59-four-oh-three-b-457-hospital-payout" ] }, { "label": "A late TSP increase missed the desired payroll window.", "text": "After a midyear pay rise, a saver reported $15,701.68 contributed toward the 2025 $23,500 limit and a $7,798.32 gap. Replies described January effective dates and disagreed over agency pay calendars. A generic annual amount divided by 26 was insufficient.", "source": "Community · Reddit", "source_ids": [ "money59-four-oh-three-b-457-tsp-timing" ] }, { "label": "A $0 fee line did not settle TSP costs.", "text": "A participant saw $0 statement fees despite percentages in fund disclosures. Replies described expenses within fund values and separate mutual-fund-window costs: a display question, not proof the account was free.", "source": "Community · Reddit", "source_ids": [ "money59-four-oh-three-b-457-tsp-fee-display" ] }, { "label": "A teacher eventually completed a frustrating transfer.", "text": "Retired teacher Nancy Bachety described mailed forms, repeated corrections and receiving-vendor approval in a 403bwise interview. Persistence eventually worked. Her account shows paperwork friction beyond accepting an exit charge.", "source": "Community · 403bwise podcast", "source_ids": [ "money59-four-oh-three-b-457-teacher-paperwork" ] }, { "label": "Old accounts still needed a former employer's confirmation.", "text": "A household preparing for a teacher's retirement asked about combining four 403(b) accounts while one remained tied to her current job. A respondent said every one of their own 403(b) transfers had required the former employer to certify that employment had ended. Other replies favored retaining the current plan for early-retirement access. The discussion separates account cleanup, employer paperwork and access needs; the plan's terms still control what can move.", "source": "Community · Early Retirement", "source_ids": [ "money-community-20261009-403b-certification" ] } ] } ], "related": [ "the-match", "four-oh-one-k-rollover", "roth-vs-traditional", "solo-401k", "hsa-account" ] }