403b and 457b Plan Contribution Options and Rules

You can contribute to both 403b and 457b plans, but there are rules and options to consider. The annual contribution limits for 403b plans are $19,500, and an additional $6,500 if you're 50 or older.

You can contribute to a 457b plan if you're a government or tax-exempt organization employee. The catch-up contribution limit for 457b plans is $7,000 for those 50 or older.

Some employers may offer a 403b plan with a higher contribution limit, up to $19,500, plus an additional $6,500 if you're 50 or older, which is a significant benefit.

Check this out: 457b Plan Explained

A 403(b) is a retirement plan offered by public schools, tax-exempt organizations, and churches. It's a type of plan that's similar to the more common 401(k) plans.

403(b) plans are often referred to as "tax-sheltered annuities" or TSAs. They're named after their section in the tax code, which is why they're called 403(b) plans.

Universities and colleges use 403(b)s as their main retirement plan because they're 501(c)(3) organizations.

You might enjoy: Employer Can Offer 457b Plan Means

You can contribute to both 403(b) and 457(b) plans, and you can max out both plans concurrently. This is a great way to supercharge your retirement savings, as you can take advantage of the benefits of both plans.

One of the benefits of 403(b) plans is that contributions are made pre-tax, which can help you stay in or lower yourself into a lesser tax bracket. You can also contribute to a 457(b) plan, which is available to employees of state and local governmental agencies and certain tax-exempt organizations.

The Internal Revenue Code limits contributions to a 403(b) or 457(b) tax-deferred retirement plan. For 2025, the general limit is $23,500 for contributions to the 403(b) Plan and $23,500 for contributions to the 457(b) Plan. If you will be age 50 at the end of the calendar year, you may also contribute up to an additional $7,500 to each plan, for a total of $31,000 per plan.

Discover more: Catch up Contributions 457b

Here are the contribution limits for 403(b) and 457(b) plans for 2025:

You can enroll in a 403(b) or 457(b) plan at any time by setting up an account with the plan vendor you select and completing the district's Salary Reduction Agreement Form.

Contributions to a 457 plan are made pre-tax and are tax-deferred, similar to 403(b) plans. You make contributions through a salary reduction agreement, and it's less common for employers to contribute to the plan.

Contributions are capped at $22,500 in 2023, but if you're eligible, you can make special catch-up contributions. These contributions allow you to contribute more than the annual limit, but only if you meet certain conditions.

To be eligible for special catch-up contributions, you must be within three years of your normal retirement age, which is specified in your employer's 457 plan. Normal retirement age is typically the age you choose for initiating your Special 457 Catch-Up election.

Explore further: What Can You Catch but Can T Throw?

You must be age 65, or have the right to retire to receive full retirement benefits under your employer's pension plan with no reduction for age or service, or have no later than age 70½ to make special catch-up contributions.

Here are the requirements for making special catch-up contributions:

Withdrawals from a 457 plan are taxed as ordinary income, but there's a huge advantage: you can withdraw your contributions without penalty if you separate from service. This can be a lifesaver if you need to retire before age 59 ½.

Employer contributions can make a huge difference in building your retirement savings. Employers can contribute to your 403(b) plan, allowing for total employee/employer contributions to exceed the employee maximum of $20,500 in 2022, up to a limit of $61,000.

Employers often match employee contributions through a match, which can be 100% of your contribution amount up until yours reaches 6% of your annual pay. Some schools even offer a flat percentage, contributing anywhere from 7-15% of your pay into your 403(b) regardless of whether you make employee contributions or not.

Employer contributions to a 457(b) plan count toward the employee’s maximum contribution limit, and the total of employee/employer contributions cannot exceed $20,500. It's worth noting that not all employers contribute to these plans, but it's definitely worth checking if your employer offers this benefit.

For your interest: What Is Contribution Margin

The contribution limits for 403(b) and 457(b) plans are set by the IRS and can be a bit complex, but don't worry, I've got the details.

The maximum pre-tax employee contribution to a 403(b) plan is $22,500 if you're under 50, and $30,000 if you're 50 or older, thanks to the catch-up contribution of $7,500.

Your employee and employer contributions combined cannot exceed $66,000, or $73,500 if you're 50 or older. It's essential to keep this in mind, even if you don't think you'll reach this limit.

The 15-Year Rule allows employees with 15 years of service and an annual average contribution of less than $5,000 to contribute an extra $3,000 per year, up to a lifetime limit of $15,000. However, this is not mandatory for employers to offer.

The contribution limits for 403(b) and 457(b) plans are the same, and in 2025, the general limit is $23,500 for each plan, with an additional $7,500 catch-up contribution allowed for those 50 or older.

Worth a look: Why Can T You Agree with Me for Once?

Participants aged 60-63 can make "super" catch-up contributions, which are 50% more than regular catch-up contributions, increasing the regular catch-up limit to $11,250.

In 2022, the elective deferral limit for employees was $20,500, with a $6,500 catch-up available for employees aged 50 years or over.

If you have both a 403(b) and a 457(b) plan, like Stacy, who works for the University of New Hampshire, you can contribute up to the annual limits to each plan.

Contributions to both plans are limited to 100% of your compensation, so if your gross wages are under the maximum contribution limits, your contribution will be limited to the amount of your wages for the year.

Related reading: 457b 2024 Contribution Limits

You can contribute to both a 403(b) and 457(b) plan, and the good news is that you can max out both plans concurrently.

If you're under age 50, you can defer up to $22,500 to each plan in 2023. If you're 50 or older, you may be able to defer even more, up to $30,000 to each plan, depending on the plan's rules.

To give you a better idea, here are the 2023 contribution limits for both plans:

Keep in mind that these limits are subject to change, so it's always a good idea to check the plan's website or consult with a financial advisor for the most up-to-date information.

You can also contribute to both plans if you've worked for a qualified organization for at least 15 years, and in that case, you may be eligible to contribute up to an additional $3,000 to the 403(b) plan account.

One thing to note is that employer contributions to a 403(b) plan can exceed the employee maximum of $20,500 in 2022, up to a limit of $61,000, but employer contributions to a 457(b) plan count toward the employee's maximum contribution limit.

Both 403(b) and 457(b) plans offer a range of investment options, but the specifics will vary depending on the plan you're enrolled in.

You can choose from a variety of investment options within your 403(b) and 457(b) plans, such as those offered by TIAA and Fidelity, as seen in the University System of New Hampshire's plan.

Some plans, like the WV HEPC TIAA 403(b) Plan and the WV HEPC TIAA 457(b) Plan, provide detailed information on their respective plans, which can be a good starting point for understanding the specifics of your plan.

Investment options may include TIAA and Fidelity, giving employees a great deal of flexibility in choosing investments within their plans.

To ensure you make the best investment decision, it's essential to do your research and reach out to a qualified financial advisor for guidance.

Here are some popular resources to get you started:

Let's compare and maximize contributions to 403(b) and 457(b) plans. The maximum pre-tax employee contribution to a 403(b) plan is $22,500 if you're under 50, and $30,000 if you're 50 or older.

You can contribute to both a 403(b) and a 457 plan, and each plan allows the maximum deferrals for 2023. If you're under 50, you may be able to defer $22,500 to each plan. If you're 50 or older and your 457 plan has a 3-year catch-up, you may be able to contribute up to $45,000 to the 457 plan.

You can also take advantage of the 15-Year Rule if you have 15 years of service with your current employer and an annual average contribution of less than $5,000 per year. This allows you to contribute an additional $3,000 per year to your 403(b) plan, up to a lifetime limit of $15,000.

Here's a summary of the maximum contribution limits for 403(b) and 457(b) plans:

Remember, your employee and employer contributions combined cannot exceed $66,000, or $73,500 if you're 50 or older.

Withdrawals from 457(b) plans are allowed at any time without a 10% early withdrawal penalty, even if you take a distribution when you are under 59½.

This is a huge advantage over 403(b) and 401(k) plans, which do have a 10% penalty for early withdrawals.

The 457(b) plan's penalty-free withdrawals can be a significant benefit for those who need access to their funds before retirement age.

You can contribute to a Roth account within a 403(b) or 457(b) plan, giving you flexibility in your retirement savings strategy. This is a great option if you're in a lower tax bracket now and expect to be in a higher tax bracket in retirement.

The good news is that Roth contributions are not subject to taxes, and the investments within the account grow tax-free. This means you won't have to pay taxes on the gains when you withdraw the money in retirement.

Not all plans allow for Roth contributions, so it's essential to check with your employer. If you do have the option, you can contribute up to the IRS-allowed limit, just like with traditional contributions.

Here are some key things to keep in mind:

In Stacy's case, she contributed $20,500 to her 457(b) plan as a Roth contribution, allowing her to take advantage of tax-free growth and withdrawals in retirement.