403(b)/457(b)/457 Plans

Frequently Asked Questions: 403(b)/457(b)/457 Plans

SFUSD offers active employees traditional 403(b) and 457(b) voluntary deferred compensation plans.  They allow for the investment of pre-tax earnings, through automatic payroll deductions, to save for retirement.  Any pre-tax investment gains/losses are tax-deferred until withdrawn.  Pre-tax contributions may also lower current income taxes. There is also an additional option to contribute into a Roth 457(b) deferred compensation plan.  Unlike contributions to the traditional plans which are made on a pre-tax basis, contributions to a Roth 457(b) are made on an after-tax basis with the benefit that you may be able to withdraw from your account tax-free when you retire subject to the Internal Revenue Service (IRS) rules.

Plan administration services for SFUSD’s savings plan are provided by Tax Deferred Solutions (TDS).  For more information about investment providers, changing your investment amount, and TDS’ contact information visit  https://www.403bcompare.com/employers/289. To enroll in a savings plan you must contact TDS directly at (866) 446-1072.

What are the benefits of a 403(b)/457(b) Plan?

There are significant tax advantages for participants in a 403(b)/457(b), including pre-tax contributions to a 403(b)/457(b) plan and earnings on these amounts are not taxed until they are distributed from the plan. Additionally:

  • reduced taxable income through pre-tax contributions.
  • tax-deferred earnings on plan contributions.
  • likelihood of paying less tax on assets as distributions usually occur during retirement, when an employee may be in a lower tax bracket.
  • the ability to take loans from the 403(b)/457(b) accounts.

What is the maximum amount that an employee may contribute to a 403(b)/457(b) plan?

In 2023, the annual contribution limit is $22,500. An employee who is age 50 or older may make an additional catch-up contribution of $7,500 in 2023. 

Quick Comparison


403(b) Plan

457(b) Plan

Roth 457(b) Plan

Tax Treatment of Contributions

Before Tax

Before Tax

After Tax

Tax Treatment of Earnings

Tax Deferred

Tax Deferred

Tax Free¹

Tax Treatment of Final Distributions



Tax Free¹


10% early withdrawal federal tax penalty if not age 59½ regardless of separation from service.

No 10% early withdrawal federal tax penalty after separation from service.

No 10% early withdrawal federal tax penalty after separation from service.

Distribution Restrictions

Withdrawals made prior to separation from service or prior to age 59½ can only be made due to financial hardship.  

Withdrawals made prior to separation from service or prior to age 70½ can only be made in an unforeseeable emergency.

Withdrawals made prior to separation from service or prior to age 70½ can only be made in an unforeseeable emergency.²

¹ Subject to the Internal Revenue Service (IRS) rules and regulations regarding qualified distributions.  A qualified distribution of the Roth 457(b) resulting in tax-free distribution earnings requires that the distribution is made after a 5-taxable-year period of Roth participation and is either:

  • made on or after the date you attain age 59½ and separated from service
  • made after your death, or
  • attainable to your being disabled as defined by the IRS as separation from active service because the person cannot engage in any substantial gainful activity because of a physical or mental condition.  A physician determines that the disability has lasted or can be expected to last continuously for at least a year or can lead to death.

The 5-year account holding period, attainment of age 59½, and separation of service are the key factors that result in a tax-free distribution.  If the distribution circumstance does not meet all three requirements, the "earnings" portion of the distribution is subject to ordinary income taxation.  The "after tax" contributions are never taxed again.  The Roth 457(b) is still exempt from the 10% additional excise tax if withdrawn before 59½, but the earnings portion of your account would lose its "tax-free" status if all three criteria are not met.

² For purposes of the 457(b) plan, an unforeseeable emergency is defined by the IRS as a severe financial hardship of the participant or the participant's dependent resulting from an extraordinary or unforeseeable circumstance beyond the control of the participant or the participant's dependent.


How do I start contributions into a savings plan?

You must contact TDS directly to initiate the enrollment process.  They can be reached via phone at 866-446-1072 or email at customerservice@tdsplans.org


How do I change or stop my contribution amount?

Here are the steps to stop or change a deduction:

  • Complete this form It will be electronically submitted to TDS for review and approval. The processing timeline it typically 1-2 pay periods. 
  • Once approved, TDS Group will notify SFUSD and SFUSD will enter the deduction information into EMPowerSF. The employee will see their contributions to their savings plan account reflected on their pay statement on a regular and recurring basis, until they alert SFUSD to stop deducting their contributions.
  • The funds that are deducted are sent to TDS Group to invest through the employee’s chosen provider.

I heard that there were a lot of problems with 403(b)/457(b) and 457 accounts last year. How can I be sure that they are working now?

Last year, in our first year of implementation of EMPowerSF for our payroll, there were system issues in the interface between SFUSD and TDS Group resulting in inaccurate deductions. Those issues are now fixed. We have tested and verified that 403B deductions and contributions are working as they should be.


This page was last updated on September 25, 2023