403(b) at a Glance | Atlas Benefits Advisor

403(b) at a Glance

A plain-language guide for employees of nonprofit and tax-exempt organizations

Please note: This page is for general education only. It does not recommend or compare any product or company. Costs differ by product, share class, and contract. Ask for the current prospectus and a written fee summary for any option available under your employer’s plan. Fixed accounts may show cost through the credited rate or contract terms rather than a simple expense ratio. Fee ranges and examples here are general illustrations only. This is not tax, legal, or investment advice.

What Is a 403(b)?

A 403(b) is a workplace retirement plan for employees of many tax-exempt organizations—including charities, hospitals and health systems, religious organizations, cultural institutions, other 501(c)(3) employers, and certain public educational institutions. Contributions are usually made by payroll deduction into approved mutual fund and annuity contracts. HR, benefits, or your plan administrator can confirm available options. (IRS — 403(b) Plans.)

Traditional vs Roth 403(b)

Traditional

Pre-tax contributions may lower current taxable income. Withdrawals in retirement are generally taxed as ordinary income. Required minimum distributions usually begin at the age set by law.

Roth

After-tax contributions. Qualified withdrawals—including earnings—may be tax-free if IRS rules are met. Product fees are generally the same as Traditional; tax treatment differs.

Suggested Contribution Rate

People should start with a rate that feels comfortable, then raise it by one percentage point each year when the budget allows. Small, steady increases can add up over time without a big change in any single year.

Illustrative annual contributions on a $70,000 salary

Stay at 5%

$3,500 / year

Year 3 · 7%

$4,900 / year

Year 6 · 10%

$7,000 / year

At the same salary, a 10% deferral sets aside twice as much per year as 5% ($3,500 → $7,000). Actual results will be more or less favorable. Actual deferrals depend on salary, pay calendar, and plan limits.

What 5% Looks Like Bi-Weekly (Illustrative)

$50,000

~$96

$60,000

~$115

$70,000

~$135

$80,000

~$154

$90,000

~$173

Approx. pre-tax deferral at 5% ÷ 26 pays. Your employer’s calendar may differ (e.g., 20, 22, or 24 pays).

How a Pre-Tax Contribution Affects Take-Home Pay

With a Traditional 403(b), your contribution is made pre-tax, so take-home pay often decreases by less than the full contribution amount. Social Security and Medicare taxes still generally apply. Roth contributions are after-tax, so take-home pay usually decreases closer to the full amount.

Example: $100 pre-tax contribution (illustrative)

You defer

$100

into Traditional 403(b)

Est. income-tax savings

~$25

at ~25% marginal rate

Take-home impact

~$75

not the full $100

Common Types of Fees

Expense ratio: The ongoing annual cost of a fund, shown as a percentage of assets.
Mortality & expense (M&E) / insurance charge: Often charged on variable annuities to support insurance features in the contract.
Administrative or platform fee: An account-level charge that may be a flat dollar amount, a percentage, or both.
Advisory or management fee: Charged for ongoing advice or a managed portfolio, usually in addition to fund expenses.
Surrender charge: May apply if you withdraw or transfer within a set period. Request the full schedule and any free-withdrawal amount.
Sales load or commission: Some products charge a sales fee when you buy or sell. Ask which share class your plan offers.

Typical Fee Ranges by Product Type

These ranges are general educational examples only—not quotes for any product in your plan. Cost components are described by FINRA — 403(b) Plans; SEC Investor.gov — Expense Ratio; SEC Investor.gov — Variable Annuities; and SEC Investor.gov — Mortality and Expense Risk Fee. Actual costs depend on the specific product, share class, account size, and features. Please ask for the prospectus and a written fee summary for options available to you.

Mutual Funds / Custodial

Often about 0.10%–1.00%+ per year

Often includes fund expense ratios and may include an administrative fee. May charge an upfront sales load. (SEC Investor.gov — Expense Ratio.)

Advisory / Managed

Often about 0.50%–1.50%+ advisory fee

Usually charged in addition to underlying investment costs. Ask for a full written fee breakdown. (FINRA — 403(b) Plans.)

Variable Annuities

Often about 1.25%–2.5%+ per year

Often includes insurance (M&E) charges plus fund expenses. Optional riders can add cost. Many contracts include multi-year surrender charges. (SEC Investor.gov — Variable Annuities; Mortality and Expense Risk Fee.)

Fixed Interest Accounts may not show a simple expense percentage. Cost is often reflected in the credited interest rate and any contract charges. Ask how fees and rates work on any Fixed Interest option under your plan. See the product prospectus or contract and IRS — 403(b) Plans.

Questions Worth Asking

What is the total yearly cost of what product(s), including investment, insurance, administrative, and advisory fees?
Which share class or product version of mutual funds or annuities is available under my employer’s plan?
Are there surrender charges on the mutual funds or annuity? What is the schedule and any free-withdrawal amount for the mutual funds or annuity?
If a Fixed Interest option is offered, how are costs and rates determined?
How can I get the current prospectus and a written fee summary for the mutual funds or annuities in my plan?
What happens to my account if I change employers or retire?

Practical Steps

Find out which companies and products your employer’s plan allows.
Ask for the prospectus and a written fee summary for the mutual funds or annuities in your plan.
Review current statements for fees and remaining surrender period for your plan.
If unsure about Traditional vs Roth, speak with a tax professional.
Save copies of fee disclosures for your records.

Helpful Resources

IRS — 403(b) Plans — Official overview.
FINRA — 403(b) Plans — Investor education for participants.
Investor.gov — Variable Annuities — SEC features and fees overview.
Investor.gov — Expense Ratio — Plain-language definition.
403bwise — Independent education for 403(b) participants.
Atlas Benefits Advisor — Investment Expense Illustration — How expenses can affect long-term savings.
403bCheckup.com — Review your current 403(b) information.

Atlas Benefits Advisor Expense Illustration Run a 403(b) Checkup

For education only. Fee ranges and examples are general illustrations and may not match any product in your plan. They are not recommendations. Third-party links are shared for learning; Atlas Benefits Advisor does not control those sites.

Questions about your 403(b)? We’re here to help you review your options.

Call (631) 389-2358 • Text (631) 904-0901 • 410 Motor Parkway, 2nd Floor, Hauppauge, NY 11788

admin@atlasbenefitsadvisor.com

Christopher J. Vargas is a Registered Representative and Investment Adviser Representative of/and offers securities and investment advisory services solely through Equity Services, Inc., Member FINRA/SIPC, 410 Motor Parkway, 2nd Floor, Hauppauge, NY 11788, 631-582-6400. Atlas Benefits Advisor is independent of Equity Services, Inc. Equity Services, Inc. and its representatives do not offer tax or legal advice. For advice concerning your own situation, please consult with your appropriate professional advisor. This material does not compare, rate, or recommend any product or provider. For education only. Fee ranges and examples are general illustrations only and may not reflect any product available under your plan. Contribution and paycheck figures are illustrative only and are not projections of investment results or guarantees of any outcome. TC9068735(0826)3