403(b) Plans and 457(b)s

(Non-governmental) (ERISA & Non-ERISA)

For-profit companies often offer 401(k) retirement plans for their employees; non-profit entities can offer 403(b) plans.

As wonderful as these plans are for employees, the past few years have seen many changes to the rules that govern 403(b) plans. The Ryding Company will help you wend your way through these changes, making sure your 403(b) plan is compliant. We also can design a plan for you.

A 403(b) plan – like its cousin the 401(k) – is a great way to help a non-profit’s employees save for their retirements. They contribute a portion of their gross salary to the plan, thus reducing their total taxable income in the present and deferring paying taxes on their contribution until they turn 59 ½  and/or retire (when most individuals’ tax burden should be lower).

Another benefit to non-profit employees offered a 403(b) retirement plan: vesting is almost immediate. Most 401(k) plans tend to have vesting requirements that are spread out over a few years, but 403(b) plans tend to vest immediately, or have a shorter time frame than 401(k) plans.

457(b) Retirement Plans

Help Employees Accrue Additional Retirement Savings Quickly

A Section 457(b) plan is a non-qualified deferred compensation plan similar to a 403(b) plan, although it is more common among state and local public employers and certain types of non-profit entities, such as 501(c) entities, charities, hospitals, unions, labor, chambers of commerce, or agricultural groups. A 457(b) plan benefits your employees because even if you already offer a 403(b) plan, your workers can also contribute to a 457(b) plan up to the maximum amount in each. 

In addition, there is a special Section 457 catch-up limit which may be added to the plan document.  This may allow participants who are within three years of their plans normal retirement age to contribute the lesser of 1) the basic annual limit (which may cause maximum deferral limit to be two times the annual limit) or 2) the allowable contribution or the underutilized limit from prior years.  However, workers over 50 have to choose between the normal catch—up or the three year cap.

As for 457(b) plans, there currently are no annual reporting requirements.

Whether you’re looking to set up a 403(b), a 457(b) plan, or both for your public or non-profit entity’s employees, we can help design and set these plans up for you. We also offer ongoing consulting services, should you have questions or need additional services.

Offering 457(b) plans as well as 403(b) plans can help those employees who have started saving for retirement a bit late catch up quickly in a very big way.