Your job may offer a 403(b) retirement plan if you work in the school system, government, health care agency, or non-profit organization. There are various ways contributions are made to the plan by you and your employer.
You could increase the contributions to provide a healthy retirement in the years ahead. Here are five tips to improve your account if your particular plan allows:
1. Employer matching funds: One of the best ways to increase your 403(b) contribution is through employer matching funds. They can quickly and significantly enhance your plan with free money to build your retirement fund.
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The IRS allows a maximum contribution of $18,000 each year. That's about three times as much as other qualified retirement plans. Increase your contributions for more matching funds.
2. Catch-up contributions: If you're age 50 or over, you can contribute an additional $6,000 for catch-up contributions. Catch-up contributions of $5,500 are also allowed for 2014. Check with your administrator about the limits allowed in your plan.
3. 15-years service provision: Ask the plan administrator or person at work who handles 403(b) retirement plans about the 15-years of service provision. Under this rule,
the IRS allows as much as $20,500 for catch-up contributions.
You must have at least 15 years of service with the school system, hospital, home health agency, welfare service agency, or church to qualify for the catch-up limit. The additions must also be included in the terms of your plan.
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4. Your plan may have particular ways of contributing: Choose the one that best fits your financial condition. Elective deferrals allow contributions to your 403(b) account through salary reductions. Non-elective contributions might include regular contributions, matching funds or mandatory contributions by the employer.
5. Tax-deferred: Money you put into your account is often tax-deferred until you begin to take money out at retirement when it is taxed. This might help if you are in a lower tax bracket at the time.
However, you can also choose after-tax contributions if your plan allows it,
according to Money-Zine. The contributions are taken from your paycheck after taxes. You won't be taxed on the contribution portion when you take the money out.
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