A retirement savings plan available to employees of public schools, nonprofits, and churches. The 403(b) functions similarly to a 401(k) with matching contribution limits but uses different nondiscrimination testing rules.
Why 403(b) Plan matters for employers
403(b) plans allow the same 2024 deferral limits as 401(k) plans: $23,000 employee limit with $7,500 catch-up for those 50 and older. A unique 403(b) feature is the 15-year rule that allows certain long-tenured employees of qualifying organizations to contribute an additional $3,000 per year up to a lifetime limit of $15,000. Investment options in 403(b) plans are typically limited to annuity contracts and mutual funds.
403(b) plans are subject to ERISA requirements unless they qualify for the church plan or governmental plan exemptions. Non-ERISA 403(b) plans have fewer administrative requirements but also provide less legal protection to employees. Payroll integration for 403(b) plans works the same way as 401(k): employee deferral amounts are deducted each pay period and remitted to the plan carrier.
How BEG handles 403(b) Plan for clients
BEG Managed Payroll handles 403(b) Plan as part of a fully managed payroll service at $25-$45 per employee per month. Clients do not need to track compliance rules, filing deadlines, or calculation methods related to 403(b) Plan on their own. Everything is included. Learn about BEG Managed Payroll.
Frequently asked questions
Do employers have to manage 403(b) Plan themselves?
No. A managed payroll provider handles 403(b) Plan as part of full-service payroll. BEG manages this for clients at $25-$45 PEPM with no system migration required.
What happens if 403(b) Plan is handled incorrectly?
Errors related to 403(b) Plan can trigger IRS penalties, state agency assessments, or employee disputes. Catching and correcting errors before filing is far less costly than after-the-fact corrections.
How does BEG handle 403(b) Plan for managed payroll clients?
BEG tracks, calculates, and remits everything related to 403(b) Plan as part of fully managed payroll. Clients do not need to monitor compliance -- that is included in the service at $25-$45 PEPM.
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About the author
Anthony Moretti is VP of Sales at Business Executive Group, where he builds BEG's managed payroll and HR service verticals for employers across Dallas-Fort Worth and nationwide. He writes the BEG Payroll Glossary to give employers plain-English answers on payroll and compliance.
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