Retirement Frequently Asked Questions

Your questions, answered

We’ve collected some of the most frequently asked questions about our products and services, and grouped them by topic to make it easier for you to access the information you need to make informed financial decisions.

 

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403(b) | 457(b) | Back to all FAQs

 

403(b)

  • What is the difference between a 457(b) plan and a 403(b) plan?
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    Both types of plans are tax deferred, but the 457(b) lets you start withdrawing money from your account as soon as you stop working for the sponsoring employer, no matter your age or in the case of death, disability or unforeseen emergency, regardless of your age if certain requirements are met. Meanwhile, 403(b) plans allow standard, penalty-free withdrawals at age 59½, as well as limited early withdrawal exceptions.

  • What is the difference between a 403(b) plan and a Roth 403(b) plan?
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    With a 403(b), contributions are made pre-tax. Taxes are then paid on withdrawals, typically in retirement when you will likely be in a lower tax bracket. With a Roth 403(b), your contributions are made after taxes have been paid, and then withdrawals taken within the limits of your plan are tax free.

  • Are there any additional contribution catch-up provisions for the 403(b) plan?
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    Depending on your district plan, the 403(b) may have a 15 year service catch-up which may add up to $3,000 annually for 5 years. You must qualify every year through your district’s administrator.

  • How much can I contribute to a 403(b) plan?
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    In 2021, you may contribute up to $19,500 to a 403(b) and/or Roth 403(b). If you are over age 50, you may contribute an additional $6,500 annually in 2021. This limit is combined for both plans.

  • Can I transfer my 403(b) plan at any time?
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    Yes. If you are still employed, you may transfer your 403(b) between eligible 403(b) providers. If you are no longer employed or otherwise meet a qualifying event, you become eligible to roll funds over to an IRA or other eligible retirement plan.

  • How much can I contribute to a 457(b) plan?
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    In 2021, you may contribute up to $19,500 to a 457(b). If you are over age 50, you may contribute an additional $6,500 annually in 2021. This limit is separate from the 403(b) limit.

  • What is the difference between a 457(b) plan and a 403(b) plan?
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    Both types of plans are tax deferred, but the 457(b) lets you start withdrawing money from your account as soon as you stop working for the sponsoring employer, no matter your age or in the case of death, disability or unforeseen emergency, regardless of your age if certain requirements are met. Meanwhile, 403(b) plans allow standard, penalty-free withdrawals at age 59½, as well as limited early withdrawal exceptions.

  • Are there any additional contribution catch-up provisions for the 457(b) plan?
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    Depending on your district plan, for the year 2021, you may be able to add an additional $19,500 in addition to the standard limit of $19,500. This cannot be used with the age 50+ catch-up provision. This catch-up is used during your final 3 years before retirement age (deemed as age 62 or 65, depending on your district plan). You must qualify every year through your district’s administrator.

Investment products are not federally or NCUA-insured, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.

Ameriprise Financial is not affiliated with the financial institution.

RBFCU Retirement Program, a financial advisory practice of Ameriprise Financial Services, LLC, is a division of RBFCU Investments Group LLC.

The initial consultation provides an overview of financial planning concepts. You will not receive written analysis and/or recommendations.

Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.

Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.

Securities offered by Ameriprise Financial Services, LLC. Member FINRA and SIPC.

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