TIAA-CREF is a financial services company that offers a variety of retirement savings plans, including 401(k) and 403(b) plans. Both 401(k) and 403(b) plans are tax-advantaged retirement savings plans that allow participants to save money for retirement on a pre-tax basis. This means that the money you contribute to these plans is deducted from your paycheck before taxes are taken out, which can reduce your current tax bill. The money in these plans grows tax-free until it is withdrawn in retirement, at which point it is taxed as ordinary income.
Key Differences Between 401k and 403b Plans
401k and 403b plans are both retirement savings vehicles offered by employers. They share some similarities, such as tax benefits and the ability to contribute through payroll deductions. However, there are also some key differences between the two plans.
One of the most notable differences is the type of employer that can offer each plan. 401k plans are available to for-profit companies, while 403b plans are available to non-profit organizations, such as schools, hospitals, and charities.
Another difference is in the contribution limits. For 2023, the 401k contribution limit is $22,500 ($30,000 for those age 50 or older). The 403b contribution limit is lower, at $20,500 ($27,000 for those age 50 or older).
Finally, 401k plans are subject to ERISA (the Employee Retirement Income Security Act), while 403b plans are not. ERISA provides certain protections to participants in retirement plans, such as the right to sue for benefits and the right to a fair hearing if benefits are denied.
| Feature | 401k | 403b |
|---|---|---|
| Employer type | For-profit companies | Non-profit organizations |
| Contribution limit | $22,500 ($30,000 for those age 50 or older) | $20,500 ($27,000 for those age 50 or older) |
| ERISA coverage | Yes | No |
TIAA-CREF Retirement Plan Offerings
TIAA-CREF offers a variety of retirement plans to help individuals save for their future. These plans include 403(b) plans, 401(k) plans, and IRAs.
403(b) Plans
403(b) plans are retirement savings plans that are available to employees of public schools and certain other tax-exempt organizations. These plans allow employees to contribute a portion of their salary to a tax-deferred account. The contributions are not taxed until they are withdrawn in retirement. 403(b) plans are similar to 401(k) plans, but they have some different rules and limitations.
401(k) Plans
401(k) plans are retirement savings plans that are available to employees of most private companies. These plans allow employees to contribute a portion of their salary to a tax-deferred account. The contributions are not taxed until they are withdrawn in retirement. 401(k) plans have some different rules and limitations than 403(b) plans.
IRAs
IRAs are retirement savings plans that are available to individuals of all ages. These plans allow individuals to contribute a portion of their income to a tax-deferred account. The contributions are not taxed until they are withdrawn in retirement. IRAs have some different rules and limitations than 403(b) plans and 401(k) plans.
| Plan Type | Eligibility | Contribution Limits |
|---|---|---|
| 403(b) | Employees of public schools and certain other tax-exempt organizations | $22,500 in 2023 ($30,000 for those age 50 or older) |
| 401(k) | Employees of most private companies | $22,500 in 2023 ($30,000 for those age 50 or older) |
| IRA | Individuals of all ages | $6,500 in 2023 ($7,500 for those age 50 or older) |
Is TIAA-CREF a 401(k) or 403(b)?
TIAA-CREF offers both 401(k) and 403(b) retirement savings plans. 401(k) plans are offered by for-profit companies, while 403(b) plans are offered by public schools and certain other tax-exempt organizations.
Both 401(k) and 403(b) plans allow you to save money for retirement on a tax-advantaged basis. However, there are some key differences between the two plans.
Tax Implications of Retirement Savings Plans
| Plan Type | Contributions | Withdrawals |
|---|---|---|
| 401(k) | Pre-tax | Taxed as ordinary income |
| 403(b) | Pre-tax or Roth | Taxed as ordinary income or tax-free |
- Contributions: With a 401(k) plan, your contributions are made pre-tax, which reduces your current taxable income. With a 403(b) plan, you can choose to make pre-tax or Roth contributions. Roth contributions are made with after-tax dollars, but your withdrawals are tax-free.
- Withdrawals: When you withdraw money from a 401(k) or 403(b) plan, it is taxed as ordinary income. However, if you make Roth contributions to a 403(b) plan, your withdrawals are tax-free.
- Eligibility: 401(k) plans are offered by for-profit companies. 403(b) plans are offered by public schools and certain other tax-exempt organizations.
- Contribution limits: The contribution limits for 401(k) and 403(b) plans are the same. For 2023, the limit is $22,500 ($30,000 if you are age 50 or older).
Evaluating Plan Features and Benefits
TIAA-CREF offers both 401(k) and 403(b) plans, each with its own distinct set of features and benefits:
401(k) Plan
- Available to employees of private companies and nonprofit organizations
- Employer may contribute matching funds
- Contributions are made on a pre-tax basis, reducing current taxable income
- Wide range of investment options available
403(b) Plan
- Available to employees of public schools and certain other tax-exempt organizations
- Employer contributions are always pre-tax
- Elective deferrals (employee contributions) can be made on a pre-tax or Roth basis
- May offer additional catch-up contribution limits for those nearing retirement
The table below summarizes the key differences between TIAA-CREF’s 401(k) and 403(b) plans:
| Feature | 401(k) Plan | 403(b) Plan |
|---|---|---|
| Employer contributions | May be available | Always available |
| Employee contributions | Pre-tax only | Pre-tax or Roth |
| Investment options | Wide range available | Generally limited compared to 401(k) plans |
| Catch-up contributions | May be available | Available for those nearing retirement |
Alright folks, I hope this little dive into the world of retirement savings has been helpful. Whether you’re rocking a 401(k) or a 403(b) through TIAA-CREF, or you’re just starting to explore your options, remember to keep an eye on those fees and make sure your investments align with your goals. Thanks for hanging out with me today. If you’ve got any other burning financial questions, be sure to swing back by. I’m always happy to chat about the wonderful world of money!