Investment Choices
Many 403(b) plans offer a limited menu of investments. Some are built primarily around annuity products.
403(b) vs. 457(b): Key Differences for Long Island Educators & Public Employees
For Educators & Nonprofit Employees
403(b) Tax-Sheltered AnnuityOverview
A 403(b) plan, also known as a tax-sheltered annuity plan (TSA), is a retirement savings plan that allows eligible employees to set aside a portion of their salary into individual accounts. These plans are offered by public schools and certain tax-exempt organizations — such as churches and nonprofits.
With a 403(b), you can contribute pre-tax or after-tax (Roth) dollars directly from your paycheck. Employers may also contribute. Pre-tax contributions lower your taxable income in the year you make them. The money then grows tax-deferred until you withdraw it in retirement.
Some plans also offer Roth 403(b) accounts. With Roth contributions you pay taxes now, but qualified withdrawals — including earnings — are tax-free in retirement.
2026 Contribution Limits
Elective deferral limit$24,500
Age 50+ catch-up+ $8,000
Ages 60–63 enhanced catch-up (if plan allows)+ $11,250
Overall annual additions (employee + employer)$72,000
Long-tenured employees (15+ years with the same eligible employer) may also have access to a special 15-year catch-up of up to $3,000 per year (lifetime maximum $15,000), if the plan permits it.
Important Considerations
403(b) plans offer meaningful tax advantages and relatively high contribution limits. At the same time, several practical points are worth understanding:
Fees
Certain 403(b) options — especially variable annuities — can carry higher ongoing fees. Over time those costs could reduce what you keep.
Early Withdrawals
Withdrawals before age 59½ are generally subject to ordinary income tax plus a 10% additional tax penalty.
Related Guidance for Educators
Complimentary 403(b) Checkup
A short review of fees, expense ratios, and next steps.
How 457(b) Plans Work
Another savings option many Long Island districts offer.
Teachers’ Retirement Pension Options
How the pension check sits beside supplemental savings.
Teachers, K-12, & School Employee Benefits
The broader benefits picture for educators.
Frequently Asked Questions
A 403(b) plan, also known as a tax-sheltered annuity plan (TSA), is a retirement savings plan that allows eligible employees of public schools and certain tax-exempt organizations to set aside a portion of their salary into individual accounts.
Pre-tax 403(b) contributions lower your taxable income in the year you make them and grow tax-deferred until withdrawal. Roth 403(b) contributions are made with after-tax dollars, and qualified withdrawals—including earnings—are tax-free in retirement.
For 2026, the elective deferral limit is $24,500. The age 50+ catch-up is an additional $8,000. If the plan allows it, the ages 60–63 enhanced catch-up is an additional $11,250. The overall annual additions limit (employee + employer) is $72,000. A special 15-year catch-up of up to $3,000 per year (lifetime maximum $15,000) may also apply if the plan permits it.
Certain 403(b) options—especially variable annuities—can carry higher ongoing fees. Over time those costs can meaningfully reduce what you keep. A complimentary checkup can help you see the fees and investment menu in your plan.
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This page provides general educational information about 403(b) plans. It is not personalized advice, a recommendation, or a guarantee of any specific outcome. Contribution limits, plan features, and tax treatment depend on current law and your employer’s plan document. Consult a qualified professional before making decisions.
Working with a Financial Professional
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