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The maximum you may contribute to your 403(b) is limited by federal tax law. The "normal" limit is 100% of compensation, up to $17,500 for 2014. The limit varies by your individual circumstances. Additional "catch-up" amounts may be contributed for individuals age 50 or over, and employees with 15 or more years of service with their same educational employer.


Yes. You may change the amount you contribute to your 403(b) program as permitted by your employer. You also can stop contributing at any time.


If you contribute to a 403(b) or you're "covered" under a pension plan or any qualified retirement plan, you’ll be eligible for a full IRA deduction only if your modified adjusted gross income (before the IRA deduction) is no more than $60,000 in 2014 if you're single and $96,000 in 2014 if you're married filing a joint return. Eligibility for partial IRA deductions is phased out as your AGI increases.


If your employer's plan provides for loans, and your 403(b) contract has a loan provision, you can take a loan on a portion of your 403(b) balance. You will be charged interest on the loaned amount and the loan must be repaid within a maximum time period.


Generally, because your 403(b) is designed to help you save for your retirement, you can’t withdraw amounts from your 403(b) program account without a 10% tax penalty until you permanently terminate employment with your current employer or you reach age 59½.

You must begin receiving payments by April 1st of the calendar year immediately following the calendar year you reach age 70½ or, in most cases if you’re still working, then by April 1st of the calendar year after you leave work.



If you go to work for another eligible employer, you may transfer your 403(b) to your new eligible employer and continue to contribute to your 403(b), provided your new employer's 403(b) plan permits and your 403(b) provider is part of your employer's plan or there is an information sharing agreement in place between your new employer and your 403(b) provider.

If you go to work for an employer that isn't eligible, you can't make any more contributions to your 403(b); however, you can keep your retirement savings in your 403(b) and continue to benefit from any tax deferred accumulation within the program.

With an eligible rollover distribution, you may roll over your 403(b) retirement savings to a new 403(b), 401(a), 401(k) or governmental 457(b) plan, or you can roll it over into an IRA. Certain limitations apply so check with your 403(b) provider's representative.



Your employer determines which 403(b) providers are considered part of the plan. You can direct contributions only to those providers that are part of the plan.


Current 403(b) regulations permit investment exchanges between accounts and contracts (called "exchanges") only if the receiving contract or account includes distribution restrictions at least as stringent as the old contract or account and if:

  1. the receiving account or contract is part of the employer's plan, or
  2. your employer has entered into an information sharing agreement with the receiving 403(b) vendor.

If an information sharing agreement is required, the information sharing agreement must specify that the employer will share information sufficient for the institution providing the account or contract to satisfy the applicable requirements, including administering loans and hardship distributions and determining whether an employee has had a severance from employment. The information sharing agreement must be entered into before the exchange takes place.



If an information sharing agreement was not entered into between the employer and the vendor, the value of the employee's account or contract becomes income taxable to the employee. If the employee has more than one contract, the value of all the employee's contracts becomes income taxable. In addition, whether the employee has one contract or several under the plan, if an information sharing agreement is not entered into between the employer and the vendor, and if the employee is under age 59½ on the date of the exchange, the value of all contracts may be subject to a 10% Federal tax penalty. In many cases, this income will also be subject to state income tax.


Information sharing agreements are intended to help employers comply with 403(b) limits on contributions, distributions and loans. The agreements allow employers to collect contribution, distribution and contract value information from the issuers of exchanged 403(b) contracts.

Circular 230 Disclaimer - The information contained in this internet web page (including linked pages) concerning Federal tax issues is not intended to (and cannot) be used by anyone to avoid IRS penalties. This communication is intended to support the sale of insurance, annuity and other financial products and services. You should seek advice based on your particular circumstances from an independent tax advisor.

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