Based in Madison, Wisconsin, Well and Good LLC Executive Director Richard (Dick) Shafer draws upon financial industry experience and fiduciary best practices to advise retirement plan sponsors. Dick Shafer focuses on retirement plans of independent schools and other not-for-profit organizations beyond Madison -- throughout the United States including New York, California and Massachusetts.

1. Retirement Plan Basics: What is a
403(b) plan?
Dick Shafer, Madison

2. Introduction
• Based in Madison, Wisconsin, Well and Good LLC Executive Director Richard (Dick)
Shafer draws upon financial industry experience and fiduciary best practices to
advise retirement plan sponsors. Dick Shafer focuses on retirement plans of
independent schools and other not-for-profit organizations beyond Madison --
throughout the United States including New York, California and Massachusetts.
Q: What is a 403(b) plan?
A: A 403(b), also known as a tax-sheltered annuity, is a type of retirement plan
available to the employees of certain tax-exempt organizations. While this type of
retirement plan is similar to a 401(k), Internal Revenue Code rules may be
somewhat more advantageous for 403(b). For example, there is no need to create
a trust which reduces the complexity and cost of plan administration.
Q: Who is eligible for a 403(b) plan?
A: Government educational entities and 501(c)(3) nonprofit organizations, such as
independent schools or colleges, may establish this type of plan for the benefit of
their employees. It is possible to sponsor a 403(b) plan and another retirement
plan.

3. 403(b) plan
• Whether to establish a plan under Code Section 403(b) rather than a 401(k) or
401(a) is decided by the employer as plan sponsor, not by individual employees.
Q: How are funds in 403(b) plans invested?
A: Employer contributions are invested in annuities and/or mutual funds selected
by the employer as plan sponsor. The employer may make the same investments
available for elective employee contributions or establish separate rules.
Q: What are the contribution limits for 403(b) plans?
A: Generally the limits for employer and/or employee elective contributions are
the same for plans established under Code section 403(b) as for 401(k). However,
if the 403(b) plan allows, under certain circumstances employees who have at
least 15 years of experience may choose to contribute an extra $3,000 annually, up
to a maximum of $15,000. Whereas 401(k) plans typically establish limits on
eligibility, with very few exceptions any employee may arrange elective
contributions to a 403(b) plan