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A 403(b) plan is a retirement savings plan that is available to employees of certain nonprofit organizations, schools, and government entities. Similar to a 401(k) plan offered by for-profit companies, a 403(b) plan allows employees to save for retirement through salary deferrals into investment accounts.

One key feature of a 403(b) plan is the ability for employees to make pre-tax contributions to their retirement savings. This means that a portion of an employee’s salary can be withheld before taxes are taken out, reducing their taxable income for the year. Additionally, some 403(b) plans may also allow for after-tax contributions or Roth contributions, which can provide additional flexibility in how employees save for retirement.

Another important aspect of a 403(b) plan is employer matching contributions. Some employers may choose to match a certain percentage of their employees’ contributions, up to a certain limit. This can provide a significant boost to an employee’s retirement savings, as it essentially provides free money from the employer.

Investment options within a 403(b) plan typically include a range of mutual funds, annuities, and other investment vehicles. Employees can choose how to allocate their contributions among these options based on their risk tolerance, time horizon, and retirement goals. It is important for employees to review and monitor their investment choices regularly to make sure they are on track to meet their retirement objectives.

One meter in a 403(b) plan refers to the maximum amount of annual contributions that can be made by an employee. The current limit for 2021 is $19,500, although employees age 50 and older can make additional catch-up contributions of $6,500. Some employees may also be eligible to contribute more based on certain factors, such as years of service with the organization.

In conclusion, a 403(b) plan can be a valuable tool for nonprofit employees to save for retirement. By taking advantage of pre-tax contributions, employer matching contributions, and a diverse range of investment options, employees can build a strong financial foundation for their future. It is important for employees to understand their plan’s features and limits, and to regularly review their contributions and investments to ensure they are on track to reach their retirement goals.