What is a 403(b) Program?

A 403(b) is a retirement plan set up by your employer that allows you to set aside money for retirement on a pre-tax basis through salary reduction. Your premium payments into a 403(b) annuity and any earnings grow tax-deferred until you make a withdrawal, presumably at retirement.

While most educators receive a pension from their school upon retirement, the money from a pension typically does not match their salaries. Putting money into a 403(b) before retirement can help offset the difference between your current salary and the amount you receive from a pension.

Benefits of a 403(b)

  • Payments through payroll reductions reduce your current taxable income.
  • Higher payment limits than Individual Retirement Annuities (IRAs).
  • Income taxes are deferred until withdrawal at retirement.
  • Disciplined retirement planning through regular payroll reduction.

Horace Mann Life Insurance Company underwrites Horace Mann annuities.  Annuities should be considered long-term investments. If you take your money out early, you could be subject to an additional 10 percent federal income tax. In addition, withdrawals on tax-qualified contracts may be restricted by the IRS or your employer’s plan.  You should consult with your tax advisor regarding any tax-favored products.  While an annuity is not required in order to obtain tax deferral within a 403(b) or other tax-qualified retirement plan, an annuity offers additional benefits.  In order to offer these benefits there are additional charges and fees in the annuity.

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