Monday, October 6, 2008

403 (b)(7) Plans

Here is a quick review about some facts about 403(b)(7) retirement plans. All information should be accurate as of today's date Oct. 6, 2008.

This retirement plan is used for government, charity, and non-profit organizations. In this plan, pre-tax contributions are made by employees and any employer contributions are tax deductible.
Contribution Limits For Employers: 100% of participant's compensation or $46,000 and the Exclusion Allowance
Contribution Limits For Employees: $15,500
Catch up Contributions for Employees with > 15 years of Service:
  • $5,000
  • $15,000 minus amounts previously excluded from gross income under the "catch up provision"
  • $5,000 X Years Working For Employer - Elective Deferrals

  • Age Limits: Must take RMD by April 1st of achieving age 70.5 or after retirement, whichever is longer.
    Qualified Exceptions for Pre-Mature Distribution include: Death, disability, life expectancy formula, separation from service after age 55, hardship, court order, and medical bills greater that 7.5% of Adjusted Gross Income.
    Loans are allowed on 403(b) plans.

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