What is a 403(b)?
As determined by Section 501(C)(3) of the Internal Revenue Code, the 403(b) is a tax deferred retirement plan available to employees of educational institutions and certain non-profit organizations. Contributions and investment earning in a 403(b) grow tax deferred until withdrawal (assumed to by retirement), at which time they are taxed as ordinary income. See IRS Publication 571 for IRS details on the 403(b).
When was the 403(b) established?
The 403(b) was established in 1958 by the federal government to encourage employees in certain tax-exempt organizations to establish retirement savings programs. The name refers to the relevant section in the Internal Revenue Code.
See chart for Advantages of Participating in a
Tax-Sheltered Annuity (TSA).
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