403 retirement plans are tax deferred retirement plans available to employees of educational institutions and certain non-profit organizations as determined by section 501(c)(3) of the Internal Revenue Code (IRC).

There are 10 important facts about 403b that you should really be aware of.

1. Special tax credit for savers with low-income

Eligible savers will receive a tax credit of up to 50% or up to $2,000 in contributions to an IRA, 403b, 457, SIMPLE, 401k plan and other tax-favored plans.

2. Who can use a 403b?

You are eligible to participate and start contributing in the case if you're an employee of tax-exempt organizations established under section 501(c)(3) of the IRC. There are the following contributors to the plan are teachers, school administrators, school personnel, nurses, doctors, professors, researchers, librarians and ministers.

3. Why you should contribute to a 403b?

Though the pension plan may not be equal to your salary there is a reason to contribute a 403b as your employer provides you with a pension upon your retirement. This plan can provide a healthy supplement to your pension.

4. The amount you can contribute annually

There is the elective deferral limit of $15,500 and up to 100% of including compensation if you've employer matches or other employer contributions, limits are $46,000 or 100% of compensation. If you're 50 or older at any time during the year, you can contribute an additional $5,000

5. Part time workers eligible to use 403b retirement plans

Your employer must extend the 403b plan to all the employees. Though, some employees may be not included, and they are: employees who contribute $200 or less annually, employees who are participants in an eligible deferred compensation plan (457 or 401 retirement plan) or participants in another TSA (tax sheltered annuity), non-resident aliens, students and employees who work less than 20 hours per week.

6. More tax savings

Keep in mind that all dividends, interests and capital gains earned in a 403b account are on a tax-deferred basis that means your earnings will grow tax-free until time you withdraw them.

7. Lower taxes

The tax savings grow bigger as your contributions decrease.

8. 403b plan does not decrease social security benefits

Your contributions to a 403b decrease taxable compensation for federal (and in most instances, state) income tax purposes only and don't reduce wages for the purpose of determining Social Security benefits.

9. 403b plans workings

This means that you set aside money for retirement on a pre-tax basis through a salary agreement with your employer and you choose from among the vendors offered by your employer where you want to invest the money. Till you withdraw it at retirement the money grows tax free.

10. A 403b can be rolled into an IRA

This can happen in the case if you change job, retire, become disabled or die.

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