Understanding 403(b) Retirement Plans

A 403(b) plan is a retirement savings option for employees of public education, non-profits, and specific hospitals. With benefits like tax advantages, generous contribution limits, and employer matching, it aids in growing retirement funds. Discover how 403(b) plans can potentially enhance your financial future with guidance from EP Wealth advisors.

Understanding 403(b) Retirement Plans

A 403(b) plan is a retirement savings plan available for public education organizations, some non-profit employers, and cooperative hospital service organizations. Similar to a 401(k), a 403(b) allows employees to contribute pre-tax earnings into individual accounts, which grow tax-deferred until withdrawal. This plan is designed to help employees save for a secure and comfortable retirement.

Benefits of a 403(b) Plan

A 403(b) plan can offer numerous advantages for employees, including tax benefits, higher contribution limits, catch-up contributions, and more. Explore the benefits below to understand why a 403(b) might be an excellent choice for your retirement savings strategy.


Tax Advantages

One of the primary benefits of a 403(b) plan is the tax advantage. Contributions are made on a pre-tax basis, reducing your taxable income for the year. This may lead to significant tax savings while you are actively contributing to your retirement fund. Additionally, the investment earnings on a 403(b) grow tax-deferred, meaning you won't pay taxes on the gains until you withdraw the money during retirement. This can allow your savings to compound more effectively over time.

Higher Contribution Limits

The IRS sets annual contribution limits for 403(b) plans, which tend to be higher than those for traditional IRAs. For 2024, employees can contribute up to $23,000, an increase from the previous year's limit. Combined employer and employee contributions can reach up to $69,000 annually. These higher limits enable employees to build substantial retirement savings more quickly, particularly useful for those who start saving later in their careers.

Catch-Up Contributions

For employees aged 50 and older, the 403(b) plan offers the ability to make catch-up contributions. This provision allows older workers to contribute an additional $7,500 annually, raising their total potential contribution to $30,500 for 2024. This feature is potentially beneficial for those who need to accelerate their savings as they approach retirement.

Employer Contributions

Many employers offer matching contributions to their employees' 403(b) plans. These contributions are essentially free money that can potentially significantly boost your retirement savings. The matching formulas vary by employer, but they commonly match a percentage of the employee's contribution, thereby enhancing the growth of the retirement fund.

Diverse Investment Options

403(b) plans often provide a range of investment choices, including mutual funds and annuity contracts. This diversity allows you to tailor your investment strategy to match your risk tolerance and retirement goals. A well-diversified portfolio can help manage risk and improve the potential for growth over time.

Loan Provisions

Another advantage of 403(b) plans is the ability to take loans against your account balance. While borrowing from your retirement savings is generally not advised, this option can provide a financial safety net in case of emergencies. Loan amounts, repayment terms, and interest rates will vary, so it’s essential to understand the specifics of your plan.


If you change jobs, your 403(b) savings can be rolled over into a new employer’s retirement plan or an IRA. This portability can help you to not lose your retirement savings when transitioning between jobs, making it easier to maintain a continuous savings strategy throughout your career.

Protection from Creditors

Funds held in a 403(b) plan are generally protected from creditors under federal law. This means that your retirement savings are safeguarded in the event of an employer’s bankruptcy or other financial hardships, providing peace of mind that your retirement funds will be available when you need them.


Planning Your Retirement with a 403(b)

Navigating retirement planning can be complex, but EP Wealth advisors are here to help. We provide personalized advice to help you maximize your 403(b) benefits and integrate them into your broader financial plan. Whether you are just starting your career or nearing retirement, our advisors will guide you through each step to lead your path on track to meet your retirement goals.

Find an EP Wealth advisor near you to find out more about our services or schedule a financial health assessment today.


  • EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of option are subject to change without notice. 
  • Hiring a qualified advisor and/or financial planner does not guarantee investment success and does not ensure that client or prospective client will experience a higher level of performance or results. No guaranty or warranty is made that any direct t or implied results of projections being represented here will be met or sustained. 
  • Information presented is general in nature and should be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the reding of personalized investment advice or is intended to supplement professions individualized advice. 


Our breadth of coverage across the U.S. means we’re local—here to serve your needs at your convenience.