What is the difference between the deferred compensation plan 457(b) and a tax deferred annuity 403(b)?
Both plans are regulated by the Internal Revenue Service and allow employees to set aside a portion of their earnings as tax deferred. The amount of the annual contribution for each plan is displayed on employees’ W-2’s. The deferred compensation plan is offered through the State of Illinois ( www.state.il.us/cms/2_servicese_ben/defcomp.htm). Various vendors, listed on the Tax Sheltered Annuities, 403b Plans & Investments section of the HR – Benefits web page, participate in the university’s tax deferred annuity plan. For both plans, employees are able to select various investment strategies. For 2008, the annual 403/457 limit is $15,500 per year for under age 50 and $20,500 per year for those 50 and older (www.irs.gov). There are catch up provisions under both if maximum contributions were not deducted during previous years. The plans do have different administrative plan requirements, so employees are encouraged to seek advice of a professional financial advisor before making a decis
