Are You Saving With a 403(b) or 457(b) Plan Yet?
To supplement income in retirement, MCPS offers its employees two voluntary retirement savings plans. Based on Internal Revenue Service guidelines, these plans—both defined contribution plans—are the 403(b) and 457(b).
Defined contribution plans allow you to save for retirement with pretax dollars, which reduces the taxes you pay on your current income. You do not pay taxes on that income or on your investment earnings until you withdraw the money. Your contributions are taken directly from your pay and deposited into your retirement savings plan account.
You get to decide how much money to contribute to your plan, although there are contribution limits, which are subject to change yearly. For 2020, the yearly contribution limits for 403(b) and 457(b) plans are $19,500 for each.
As you approach retirement, you may find that you have fallen short of your investment goals. If you are investing with a 403(b) and/or a 457(b) plan, you may be eligible to save more during your final years before retirement under the IRS Age 50 Catch-up Provision.
Under the catch-up provision, if you reach age 50 or older at any time during 2020, then you can contribute an additional $6,500 annually to your 403(b) and 457(b) plans. This raises your total yearly contribution potential to $26,000 for each plan, for a total maximum of $52,000 per calendar year.
Learn more about 403(b) and 457(b) plans and find out how to start saving for retirement by visiting the Fidelity website or calling Fidelity at 1-800-343-0860.