New to the 403b world - a question: Should income be taxable?

[tuni88]

I just started teaching very part-time at a local community college. I don't need the pay immediately - I have other income - so I signed up to send 95% (I've gotta leave something for beer and cigarettes) of my quite small paycheck to their 403b plan.

I just got my first pay stub and see that none of that money is currently taxable. This seems to be as good as a deductible 401k. Have I got this right? I should be in at 100%, no?

(You wouldn't mind if I had to hit you up for a cigarette now and then, would you?)

Newbie

[ERISAnut]

Yes, it is an elective deferral. You are allowed to defer up to 100%. Not sure if your pay is subject to FICA (the 7.65% employment tax).

You may also want to consider the Roth Option, depending on your marginal tax rate. Doesn't make much sense to take an income tax deduction on contributions that would otherwise be subject to a low income tax rate.

Hope this helps.

[tuni88]

Thanks.

Not subject to 6.20%, but do pay the 1.45%. Am in a high tax bracket and Roth not an option I believe.

Have been reading around in these messages and a new question comes up: How do I know if the plan I'm in is an ERISA plan or a non-ERISA plan? For sure the plan is non-matching. It's all my money only.

Also, Master, although you been a wonderful mentor and teacher to date (all 15 minutes), where can I easily get slightly more formally self-educated on 403b's? Would prefer a "highlights brochure" approach that spares details but still gets me educated enough to start to at least sound like I know what I'm talking about?

Thanks for your help.

[J Simmons]

I'm not Master, but you might try taking a look at www.403bwise.com/participants/index.html