Monday, June 25, 2007

El Paso Times - 403(b)s offer three benefits to employees of nonprofits

El Paso Times - 403(b)s offer three benefits to employees of nonprofits: "
403(b)s offer three benefits to employees of nonprofits
Raul Amaya / Guest columnist
Article Launched: 06/25/2007 12:00:00 AM MDT

Employees of nonprofit organizations, such as educators and ministers, are eligible for a tax-qualified retirement program known as a 403(b) or Tax Sheltered Account (TSA). A 403(b) offers three benefits: tax deductibility, tax deferral and salary reduction.

Its tax deductibility is why it's also called a Tax Sheltered Account. The IRS allows 403(b) participants to deduct contributions into a TSA. Suppose an educator earns $40,000 this year. By contributing $4,000 to a 403(b), he or she will get a $4,000 salary deduction or 'shelter' and thus pay 'reduced' income taxes on $36,000."

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