Investments Resource Center
403b Retirement Plans
Employees of private companies may turn to 401k plans to help build their retirement nest eggs. But what if you’re a school teacher or if you work for a tax-exempt organization, like a non-profit, hospital or library? You may have a pension waiting for you at retirement, but a 403b retirement plan may help provide additional support to reach your retirement goals.
Who’s eligible for a 403b plan?
These tax-deferred plans are designed for employees of public schools, colleges and universities, and churches. Employees of certain tax-exempt, non-profit organizations, such as charities and some hospitals, also may participate in a 403b retirement plan.
Why make 403b contributions?
Like its better-known 401k cousin, a 403b retirement plan lets you put a portion of your salary into an employer-sponsored plan to help you save for retirement. Some employers may also match your contribution.
You don’t pay taxes on what you contribute or any earnings you may accumulate until you withdraw the money –– hopefully, when you’re retired and you may be in a lower tax bracket.
Investment options
With a 403b retirement plan, you can typically invest in fixed annuities, variable annuities,or mutual funds.
Seek professional advice
Check with your investment professional to help you choose investments that best meet your retirement objectives. Remember that investing involves market risk, including possible loss of principal, and there's no guarantee that your investment objectives will be met.
403b plan withdrawals
Since 403b plans were created to help you save for retirement, there may be stiff penalties for withdrawing money early. If you do, you’ll owe:
- Income taxes on the total withdrawal
- A 10% penalty if you’re younger than 59½
- 20% federal income tax withholding unless the entire amount is rolled over to another qualified retirement plan or IRA
Neither Nationwide nor our representatives give legal or tax advice, so consult your attorney or tax advisor about tax questions.
Take the next step
Enrolling in your employer’s 403b retirement plan is a big step in preparing for your future. You can even start small − the important thing is that you start investing now to give your money time to grow.
Ask your retirement plan representative how to sign up. If your employer doesn’t offer a 403b plan, ask if they offer another kind of retirement plan. Or ask your investment professional about other ways to start investing for retirement.
Also known as . . .
403b retirement savings plans sometimes go by the names:
- TSA (tax-sheltered annuity)
- TDA (tax-deferred annuity)
Not a deposit • Not FDIC or NCUSIF insured • Not guaranteed by the institution • Not insured by any federal government agency • May lose value
Life insurance and annuities are issued by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company, Columbus, Ohio.
