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MetLife Solutions Group

Phone: 908-276-9942

Market Watch

401(k), 403 (b), 457 (b) Plans

Why 401(k) Plans?

401(k) plans can be a powerful tool in promoting financial security in retirement. They are a valuable option if you are considering a retirement plan for you and your employees. Benefits of 401(k) plans:

  • A well-designed 401(k) plan can help attract and keep talented employees.

  • It allows participants to decide how much to contribute to their accounts.

  • As a business owner, you are entitled to a tax deduction for contributions to employees’ accounts.

  • A 401(k) plan benefits a mix of rank-and-file employees and owners/managers.

  • The money contributed may grow through investments in stocks, bonds, mutual funds, money market funds, savings accounts, and other investment vehicles.

  • Contributions and earnings generally are not taxed by the Federal Government or by most State governments until they are distributed.

  • A 401(k) plan may allow participants to take their benefits with them when they leave the company, easing administrative responsibilities.


403(b)

When you offer your employees a 403(b) plan, you're giving them the opportunity to save for retirement in a plan that offers tax advantages, flexibility, and generous contribution limits.

Employees of public schools and certain tax-exempt organizations -- as determined by Section 501(c)(3) of the Internal Revenue Code -- can participate in a 403(b) plan. This includes hospitals, libraries, philanthropic organizations, and churches, as well as educational institutions such as K-12 public schools, colleges, and universities.

A focus on your employees

  • Providing your employees with the right 403(b) plan to save for retirement is an important objective for you as a plan sponsor—and we can help. MetLife Solutions Group advisors can offer personal assistance, offering a variety of investment planning tools and interactive programs.

  • We focus on the long term, so we're uniquely equipped to help your employees create an investment plan tailored to their circumstances and to provide access to timely educational resources appropriate for their stage of planning.


457(b)

There are two types of 457(b) plans. One is for government employees, including state, county, municipal workers, police officers, firefighters and some teachers. The other covers only highly compensated employees of non-profit corporations, such as hospitals, charitable groups, and unions.

Advantages of 457(b) Plans

  • All 457(b) plans share advantages over other types of employer-provided retirement plans such as 401(k) and 403(b) plans.

  • There is no 10% penalty for taking money out of a 457(b)s prior to age 59 1/2 as long as they are retiring or separating from service.

  • Income taxes are owed, but can be avoided if the money is rolled into another retirement plan. Non-profit workers can only roll the money over into another 457(b), but government plans can be rolled into a personal IRA or any employer-sponsored qualified plan as allowed by the rules of that employer’s plan.

In addition, employees who have both 457(b) plans and 401(k) or 403(b) plans can contribute the maximum allowable amount to both. The combined contribution caps are $33,000 a year, or $44,000 a year for those over age 50. Your employees can contribute up to their entire salary.

The advantages don't stop there. In addition to the "catch-up" contributions offered to employees over age 50 in most plans, many 457(b) plans allow employees who are within three years of their plan's normal retirement age to contribute up to 200% of the maximum allowable contribution.