- Percent to contribute
- This is the percentage of your annual salary you contribute to your 403(b) plan each year. Participants can contribute up to 50% of their annual income, subject to an annual maximum.
- Annual salary
- This is your annual salary from your employer before taxes and other benefit deductions. Since your contribution and any company match are based on the salary paid to you by your employer, do not include any income you may receive from sources other than your employer.
- Current age
- Your current age.
- Age of retirement
- Age you wish to retire. This calculator assumes that the year you retire, you do not make any contributions to your 403(b). So if you retire at age 65, your last contribution happened when you were actually 64.
- Current balance
- The starting balance or current amount you have invested or saved in your 403(b).
- Annual rate of return
- The annual rate of return for your 403(b) account. This calculator assumes that your return is compounded annually and your deposits are made monthly. The actual rate of return is largely dependant on the type of investments you select. From January 1970 to December 2004, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11.5% per year. During this period, the highest 12-month return was 64%, and the lowest was -39%. Savings accounts at a bank pay as little as 1% or less. It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.
- Annual salary increase
- The annual rate you expect your salary to increase. We assume that your salary will continue to increase at this rate until you retire.
- Annual Investment Fee
- This is an annual fee based on the balance of the account.
- Employer match
- An employer match is in addition to your annual contributions. It is based on a percentage of your annual contributions. This range can be anywhere from 0% to 100%. An employer match is usually only for a limited portion of your salary. Please read the definition for "Employer maximum" for a detailed description.
- Employer maximum
- This is the maximum percent of your salary matched by your employer regardless of the amount you decide to contribute. For example, let's assume your employer has a 50% match, up to a maximum of 6% of your annual salary. If you have an annual salary of $25,000 and contribute 6%, your annual contribution is $1500. With a 50% match, your employer will add another $750 to your 403(b) account. If you increase your contribution to 10%, your annual contribution is $2500 per year. Your employer match, however, is limited to the first 6% of your salary and remains at $750.
- Annual contribution limits
- Your total contribution for one year is based on your annual salary times the percent you contribute. However, your annual contribution is also subject to certain maximum total contributions per year. The annual maximum for 2005 is $14,000. This amount will increase in 2006 to $15,000. If you are over 50, a new "catch-up" provision allows you to contribute even more to your 403(b). In 2005, employees over 50 can deposit an additional $4,000 into their 403(b) account. The table below lists the maximum contributions and catch-up contributions for each year through 2006.
Year | Employee Contribution limit | Additional "catch-up" contributions for workers 50+ |
2003 | $12,000
| $2,000 |
2004 | $13,000
| $3,000 |
2005 | $14,000
| $4,000 |
2006* and after | $15,000
| $5,000 |
In addition, an additional catch-up provision for participants that did not participate in the plan earlier in their tenure may be available. These special catch-up provisions are subject to length of employment and other contribution rules. Determining your maximum contribution based on these additional catch-up provisions is beyond the scope of this calculator.
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