401(a) vs. 403(b)

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Understanding the 401(a) Plan

Eligibility and Contributions

A 401(a) plan is typically offered by government employers and educational institutions to select groups of employees. Both employers and employees contribute to this plan, with employer contributions often being mandatory. This ensures a steady accumulation of retirement savings.

Contribution Limits and Vesting

Employers set the contribution limits, which in 2024 can be up to $69,000 or 100% of your salary, whichever is lower. Vesting schedules can vary, ranging from immediate to graded, which affects when you gain full ownership of the contributions.

Withdrawals and Roth Option

Withdrawals from a 401(a) plan are subject to income tax, and early withdrawals might incur penalties. Some 401(a) plans offer a Roth option, allowing for after-tax contributions, which can be beneficial depending on your tax situation. Additionally, many 401(a) plans include a pension component, providing a stable income stream in retirement.

Exploring the 403(b) Plan

Eligibility and Contributions

The 403(b) plan is available to employees of public schools, certain non-profits, and religious organizations. Contributions can be made pre-tax or Roth after-tax, with employee contributions being more common than employer contributions.

Contribution Limits and Investment Options

In 2024, the employee deferral limit for a 403(b) plan is $23,000, with an additional $7,500 catch-up contribution for those aged 50 and above, bringing the total contribution limit to $69,000. Investment options typically include mutual funds and annuities, providing a range of choices to diversify your portfolio.

Withdrawals and Pension Option

Withdrawals from a 403(b) plan are taxed as income, and early withdrawals may incur penalties. These plans often include provisions for loans and hardship withdrawals, offering flexibility in times of need. Many 403(b) plans also offer a pension option as part of the retirement benefits.

401(A) Vs. 403(B)

How We Can Help

At The Annuity Expert, we understand that choosing the right retirement plan can be overwhelming. With over 15 years of experience as an insurance agency, annuity broker, and retirement planner, we are dedicated to finding the best solutions at the lowest costs for our clients.

We believe in providing personalized service tailored to your unique needs and preferences. Our goal is to make you feel valued and special by paying attention to every detail and demonstrating our care and thoughtfulness. We connect with you emotionally through storytelling, making our interactions more engaging and meaningful.

Our team is empowered to take initiative and make decisions that enhance your experience. Consistency in maintaining high standards builds trust and reliability, fostering genuine connections and turning transactions into lasting relationships. We approach our work with generosity, focusing on your well-being and happiness.

Why A 403(B) Might Be Better Than A 401(A)

What We Recommend

To achieve the best retirement outcome, follow these steps:

  1. Initial Consultation: Contact us for a free consultation, where we discuss your current financial situation, retirement goals, and any concerns you might have. This helps us tailor our advice specifically to your needs.
  2. Customized Plan Development: We analyze your information to develop a customized retirement plan. This includes selecting the right mix of 401(a) and 403(b) options, considering Roth versions, and integrating any pension components to maximize your benefits.
  3. Implementation and Monitoring: We assist you in implementing the plan and continuously monitor its performance. This ensures your retirement savings grow efficiently and adjustments are made as necessary to stay on track.

Features and Benefits

  • Personalized Advice: Tailored to your unique financial situation.
  • Expert Analysis: In-depth evaluation of the best retirement options for you.
  • Continuous Support: Ongoing monitoring and adjustments to your plan.

Addressing Common Objections

  • Complexity: We simplify the process by breaking down complex information and providing clear, actionable advice.
  • Cost: Our focus is on finding cost-effective solutions without compromising on quality.
  • Trust: With 15 years of experience, we have built a reputation for reliability and trustworthiness.

Not working with us could mean missing out on optimized retirement savings, facing unnecessary penalties, and not fully understanding your options. On the other hand, partnering with The Annuity Expert ensures a well-planned, secure, and stress-free retirement, giving you peace of mind and financial confidence.

Experience the satisfaction of a personalized and expertly managed retirement plan. Contact us today for free advice or a quote.

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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