For Certified Registered Nurse Anesthetists (CRNAs), the workday often involves balancing precision, focus, and a steady hand under pressure. Retirement planning, while less adrenaline-inducing, requires the same kind of careful calculation. With the right tools—like a 403(b) and a 457 plan—you can set yourself up for a secure and well-funded future.
But which plan is right for you? Or better yet, do you need to choose just one? Let’s dissect the details (no scalpel required) to help you make an informed decision about these two powerful retirement savings options.
403(b) and 457 Plans: A Quick Breakdown
Think of 403(b) and 457 plans as two sides of the same retirement coin: both are tax-advantaged accounts often available to CRNAs working in nonprofit hospitals or government settings. But like any good anesthesia plan, the key is knowing their unique features so you can match the right one to your goals.
403(b): The “Classic” Retirement Plan
A 403(b) is the nonprofit world’s answer to a 401(k), designed to help you save with pre-tax dollars (or Roth contributions, if available). In 2024, you can stash away up to $23,000 annually, or $30,500 if you’re age 50 or older. Many employers sweeten the pot with matching contributions, effectively giving you a raise toward your retirement.
Here’s the kicker: employer matches don’t count toward your annual contribution limit, so you can maximize your savings without worrying about hitting a ceiling (source: IRS Contribution Limits).
457: The Flexible Alternative
A 457 plan, also known as a deferred compensation plan, caters specifically to employees of government entities and certain nonprofits. It allows you to save the same $23,000 annually (or $30,500 if 50+). The standout feature? Penalty-free withdrawals if you leave your employer, regardless of age.
For CRNAs eyeing early retirement or a career pivot, this flexibility can be a game-changer (source: FINRA’s Guide to Retirement Plans).
How They’re Alike
Both plans share several benefits:
- Tax advantages. Contributions lower your taxable income, and investments grow tax-deferred.
- Roth options. Many plans allow after-tax contributions for potential tax-free withdrawals in retirement.
- High contribution limits. Each plan offers the same annual limits, letting you save aggressively.
But the devil, as always, is in the details.
Key Differences That Matter
1. Early Withdrawal Rules
- 403(b): Withdrawals before age 59½ are typically hit with a 10% penalty unless you meet certain exceptions, like separating from service after age 55.
- 457: You can withdraw penalty-free if you leave your employer, making it an attractive option for early retirees.
This flexibility isn’t just nice to have—it’s a lifeline if your career plans change unexpectedly. According to the National Institute on Retirement Security (NIRS), nearly half of Americans plan to retire before age 65, making the 457’s no-penalty provision a valuable asset.
2. Employer Contributions
- 403(b): Many employers offer matching contributions, which don’t count toward your annual limit.
- 457: Any employer contributions count toward your $23,000 limit, which might cramp your personal savings if your employer is particularly generous.
3. Doubling Up on Savings
Here’s the pro move: if you’re eligible for both plans, you can contribute the maximum to each—doubling your savings potential to $46,000 annually (or $61,000 for those 50+). This dual contribution capability is a huge advantage for CRNAs with strong earnings and ambitious retirement goals.
4. Catch-Up Contributions: Boosting Savings Before Retirement
Both 403(b) and 457 plans offer “catch-up” contributions for individuals who are behind on retirement savings, but they work a bit differently:
- 403(b) Catch-Up: If you’re age 50 or older, you can contribute an extra $7,500 annually, on top of the standard limit. In addition, if you’ve worked for your employer for at least 15 years and haven’t maximized contributions in the past, some plans allow an additional $3,000 per year, up to a lifetime maximum of $15,000. However, this 15-year rule is less common and subject to employer-specific guidelines (source: IRS Guidance).
- 457 Catch-Up: The 457 plan also allows age 50+ participants to contribute an extra $7,500 annually, but there’s a unique feature for those nearing retirement. In the three years before your designated retirement age, you may be eligible to contribute up to twice the annual limit—a potential $46,000 per year in total contributions. This option is ideal for CRNAs who find themselves behind on savings but ready to ramp up as retirement approaches.
This distinction gives the 457 plan a slight edge for those planning to supercharge their savings later in their careers.
Choosing the Right Plan (or Both)
Your choice will depend on your goals, timeline, and workplace benefits. Here’s a quick guide:
- If you plan to retire early: The 457’s penalty-free withdrawals make it ideal if you’re eyeing a life of leisure—or a slower pace—before age 59½.
- If your employer offers 403(b) matching: Focus on capturing those matching dollars first. It’s free money you don’t want to leave on the table.
- If you want to save aggressively: Using both plans simultaneously allows you to supercharge your savings and leverage tax advantages.
- If you’re nearing retirement age: Consider leveraging the 457’s double catch-up contributions to boost your savings significantly in the years before you leave the workforce.
The Final Prescription for Retirement Success
CRNAs know the importance of preparation—whether it’s timing an anesthesia induction perfectly or lining up the right financial tools for a comfortable retirement. The choice between a 403(b) and a 457 plan doesn’t have to be an either-or decision; with careful planning, you might benefit from both.
And just as you wouldn’t step into the OR without careful preparation, your financial future deserves the same level of attention. Working with a financial advisor who understands the unique challenges and opportunities CRNAs face can help you navigate your options, fine-tune your strategy, and ensure your retirement savings are on track.
Start planning today to take control of your financial future with confidence—because a secure retirement isn’t just a goal, it’s the reward for the work you’ve dedicated to others.