Home / For Educators / What Is a 403(b)?
403(b)
A 403(b) is a retirement savings account offered through school districts and other non-profit employers. It works much like a 401(k) in the private sector. You choose an amount to contribute, and with a traditional 403(b), it comes out of your paycheck before taxes, and it grows tax-deferred until you withdraw it in retirement. If your district paperwork calls it a TSA, short for tax-sheltered annuity, that's the same thing under an older name.
For most California educators, the 403(b) is the part of retirement they have the most control over. CalSTRS runs on a formula you can't adjust. This is the piece you can.
You start one by filing a salary reduction agreement with your district. That document tells payroll how much to withhold from each paycheck and where to send it.
Here are three things to know:
The money comes out before tax. With a traditional 403(b), your contributions are deducted from your paycheck before taxes, which lowers your taxable income today. You pay income taxes on the money when you withdraw it later.
Your money grows tax-deferred. You don't pay taxes on interest, dividends, or gains while the money remains in the account. That tax deferral is one of the main advantages of a traditional 403(b).
The IRS caps annual contributions. For 2026, you can contribute up to $24,500 to a 403(b). If you're 50 or older, catch-up contributions can increase that amount to $32,500. And if you're between ages 60 and 63, the higher catch-up limit allows you to contribute up to $35,750.
One thing that catches people off guard: the 403(b) and 457(b) have separate contribution limits. If your district offers both, you can contribute up to the full annual limit in each. For someone trying to save aggressively in the final working years, that can be a significant opportunity.
This is the part with no equivalent in the private sector, and it's the thing most educators never get told.
Your district maintains an approved vendor list. You can only contribute to a 403(b) offered by a company on that list. Two teachers in neighboring districts, contributing identical amounts over identical careers, may be choosing from completely different sets of options with completely different cost structures.
That means "what should I do with my 403(b)" is genuinely a different question depending on where you teach. California maintains a public lookup at 403bcompare.com, where you can see which vendors your district has approved.
The practical upshot: the first question isn't how much to contribute. It's what's actually available to you.
Because of the shape of a California educator's retirement.
Most private-sector workers have Social Security plus a 401(k). California teachers usually have a CalSTRS pension and, depending on their work history, little or no Social Security. The pension is reliable and fixed. It also doesn't adjust to your actual expenses.
That makes the 403(b) the flexible piece in a retirement that otherwise has very little flex in it. And because the pension is doing so much visible work, the 403(b) tends to get treated as optional. In the last ten working years, it's usually the only lever left.
The account doesn't end when your teaching does. Broadly, you can leave it where it is, move it to another eligible retirement account, or begin taking withdrawals. The right answer depends on what the rest of your retirement looks like.
There's also an age at which withdrawals stop being optional. Required minimum distributions currently begin at age 73, rising to 75 for younger savers under current law, and they apply to pre-tax balances whether or not you need the money that year.
Is a TSA the same as a 403(b)?
Yes. Tax-sheltered annuity is the older term. If your district's forms say TSA, they mean 403(b).
Can I contribute to both a 403(b) and a 457(b)?
Many California districts offer both, and the limits are separate. Availability depends on your district's plan.
Does contributing to a 403(b) affect my CalSTRS pension?
No. Your pension is calculated from service credit, age factor, and final compensation. Your 403(b) is a separate account.
How do I find out which vendors my district allows?
403bcompare.com lists approved vendors by district. Your district's benefits office can confirm.
What if I already have a 403(b) and haven't looked at it in years?
Common. Contributions can sit for a long time without anyone reviewing what they're invested in or what they cost.
If you have a 403(b) you've never really looked at, or you aren't sure whether what you're contributing is enough to cover the gap your pension leaves, that's a straightforward conversation.
Schedule Your Complimentary Review
Sources: Internal Revenue Service, 403(b) plan guidance (irs.gov). 403bcompare.com, California district vendor lookup.
Reviewed August 2026.
