403(b) and 457(b) Voluntary Retirement Savings Plans
KSU offers a 403(b) and 457(b) plan as voluntary retirement savings plans to supplement your TRS or ORP enrollment. These plans are available to part-time and full-time employees. You may elect to contribute pre-tax contributions to the 403(b) or 457(b) plans or after-tax Roth contributions to the 403(b) plan.
2020 Maximum Contribution Limit: $19,500
Age 50 Catch-up: additional $6,500
Advantages to investing a 403(b) or 457(b) pre-tax Savings plan
- Reduces current income tax liability;
- Contributions and earnings grow tax-free;
- If you think your tax liability is more now than what you think it will be in the future or upon retirement, a pre-tax savings plan may be more advantageous
Advantages to investing in an after-tax Roth 403(b) plan
- Since contributions are made after-tax, eligible retirement withdrawals are tax-free;
- Earnings grow tax-free;
- You may want to invest in this plan if you think your tax liability will be higher in the future than it is today or if you have a long time to invest until your retirement
Should I invest in the 403(b) plan or 457(b) plan?
403(b) plans allow more withdrawal options if you need to get money out prior to separation of service; penalties apply if you are under age 59 ½ except for loan withdrawals
457(b) plans allow more withdrawal options after separation from service; penalties do not apply to withdrawals after separation of service
Investment options are similar in both plans: 403(b) and 457(b) Plan Comparison Chart