The government sets the standards as to how much money can be contributed into a 403(b). The maximum amount any individual under the age of 50 can contribute is $14,000 for the 2005 calendar year. Any individual age 50 or older may contribute up to $18,000 for the 2005 calendar year.

Generally, you may choose to reduce your salary by any amount that does not exceed the lesser of two limitations: If you are 50 or older on December 31 of a given year, you can contribute an additional amount as follows: For example, employees who are age 50 or older by the end of the year can contribute $20,500 ($15,500 plus $5,000 catch-up) assuming they make at least $20,000 in salary that year.

Supplement Retirement Income - Most employees of educational institutions and other non-profit organizations are provided with a pension upon retirement. Few pension plans, however, provide an amount equal to salary. A 403(b) plan can provide a supplement to help close that gap. Lower Taxes - 403(b) contributions are made on a pre-tax basis which can greatly reduce your tax bill.

you experience financial hardshipsFor more detailed information refer to IRS Publication 571. You can obtain this document by clicking on IRS Publications and scrolling to Publication 571 Tax Sheltered Annuity Programs.

The government allows you to take a distribution from the 403(b) plan at age 59 ? without paying any penalties. However, you would still be responsible for paying taxes on the distribution since your salary deferrals were pre-tax.

In order to meet nondiscrimination requirements of the law, once a plan sponsor permits any employee to elect a salary deferral into the 403(b), the opportunity must be extended to all employees of the organization. This is known as universal availability. However, certain employees may be excluded.

Yes. Your employer must agree to make contributions to your 403(b) in accordance with a salary reduction agreement. This is an agreement between the employer and employee under which the employee agrees to take a reduction in salary or to forego a salary increase and the employer contributes that amount to a 403(b) for that employee.

Yes. The Roth IRA has Adjusted Gross Income (AGI) limitations. Singles earning up to $95,000 may contribute fully; ability to participate phases out at $110,000. Those filing jointly earning up to $150,000 may contribute fully; ability to participate for joint filers phases out at $160,000.

Yes. You may make salary reduction contributions to your 403(b), and make contributions to a SEP-IRA. However, SEP IRA contributions are generally made by an employer. Therefore, you will need to have income from self-employment or from another employer in order to have contributions made to a SEP IRA on your behalf.

The 403b is a tax deferred retirement plan available to employees of educational institutions and certain non-profit organizations. Participants contribute to either annuity contracts with insurance companies, or to mutual funds with mutual fund companies. Contributions and investment earnings grow tax deferred until withdrawal (assumed to be retirement), at which time they are taxed as ordinary income. Withdrawals before age 59 1/2 are subject to a 10% federal income tax penalty.

Generally, distributions of funds in a salary reduction 403(b) are restricted by section 403(b)(11) of the Internal Revenue Code. In order for a distribution to take place, a qualifying event must occur. These events include death, disability, severance of employment or attainment of age 59 1/2. However, a distribution to an "alternate payee" will be permitted if pursuant to a qualified domestic relations order (QDRO).

Retire before age 55 — eligible for Substantially Equal Periodic Payments (SEPP). Participants who have retired early (before age 55), but want access to their 403(b) without penalty can do so using SEPP. This provision requires that you take a series of substantially equal periodic payments. The key is that once you start these payments they must continue for five years or until you reach 59 1/2, whichever takes longer.

Death benefits to be paid under a 403(b) plan depend on when death occurs and who is the designated beneficiary on the plan. The Internal Revenue Code states that distributions generally must be made from a 403(b) plan by the participants required beginning date, which is April 1 of the year following the year in which the participant attains age 70 1/2. Different rules apply to death benefits depending on whether or not death occurs before the required beginning date.

The Health Care Reimbursement Account maximum is $5,000. The Dependent Care Reimbursement Account maximum is $5,000 per family, per plan year. ($2,500 if married filing separate Federal Income Tax returns.)

Yes. If you are a client and are actively participating in your company's 401(k), 403(b) or 457 plan, we will provide guidance assisting you to choose among the available funds in your company plan without additional charge. As a quid pro quo, we ask that you consider our firm for asset management when you withdraw your assets from your plan.