Understanding My 401(k) and 403(b)


What Is A 401(k)?

The 401(k) has been around since 1978 and is a tax-qualified, defined contribution plan that is explained in subsection 401(k) of the Internal Revenue Code. It is an employer sponsored retirement plan that allows employees to invest part of their paychecks to save for their retirement on a pre-tax basis while they are working. The contributions are deposited into the company's designated plan. It has become the most popular retirement savings plan in America. Employees can invest in a Traditional 401(k) or a Roth 401(k) if your employer plan offers it.
401(k)'s are subject to:
  • Market Risk
  • Legislative Risk
  • Limited Investment Choices
  • Vesting Periods
  • Terms set by the employer in the Plan Documents
Contact us for more information on how a 401(k): 
  • Can benefit you for retirement
  • Can reduce your taxable income
  • Portfolio's investment choices can be shaped to your specific risk tolerance


What Is A 403(b)?

A 403(b) Tax-Sheltered Annuity is a retirement fund, much like a 401k, that is available for people who are employed in Public Sector businesses. Examples of those who can contribute to these retirement vehicles are:
  • Public School Teachers/Employees
  • Chartered School Teachers/Employees
  • Policemen/Firemen
  • Government Employees (City, County, State)
  • Some Hospital Employees
State pension programs, many of which have gone away, will not be enough to live on because people are living longer and the cost of living has greatly increased in the last 10 years. The retirement income gap is real and the reality for many people is that they won’t have enough money to last throughout their retirement years. Outliving your retirement funds is a real fear that many people have today. Compromising your lifestyle and working longer are not what people want to do after working all of their life. More than ever before, people are being told that they must save on their own to supplement their retirement incomes for the future.
These 403(b) investments are funded with PRE-TAX contributions that grow TAX-DEFERRED thus helping to reduce your taxable income now that lasts for the duration of the accumulation period as long as you’re making contributions. Most employers allow their employees to take out loans using their 403b investments depending on certain requirements being met. The time to start contributing to a 403(b) is NOW.
At the DFS Group LLC, we work with many financial investment companies who are leaders in this field and offer 403b investments to eligible employees through monthly payroll deductions with their employers. These carriers and their product offerings are on the state approved vendors lists (i.e.,Texas TRS, etc.).
You control your flexible monthly contribution amounts and these products have many attractive features that help you to build your retirement funds at a much quicker pace with bonuses, minimum interest guarantees, higher interest rate caps and participation rates. They are all approved vendors with their state retirement programs.
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