The following types of contributions can be made to 403(b) accounts:
1. Elective deferrals. These are contributions made under a salary reduction agreement. This agreement allows an employer to withhold money from an individual’s paycheck to be contributed directly into his or her 403(b) account.
2. Nonelective contributions. These are employer contributions that aren’t made under a salary reduction agreement. Nonelective contributions include matching contributions, discretionary contributions and mandatory contributions made by an employer.
3. After-tax contributions. These are contributions (that aren’t Roth contributions) an individual makes with funds that must be included in income reported on a tax return. A salary payment on which income tax has been withheld is a source of these contributions. If a plan allows after-tax contributions, they aren’t excluded from income and cannot be deducted on a tax return.
4. A combination of any of the three contribution types.
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