403(b) for Teachers: Fees, Limits, and 6 Questions to Ask

I started my career as a teacher. I'm also a mother of three, which means I'm around educators constantly, and a good share of my clients are teachers or school administrators.

Here's what I've learned in all those conversations: almost nobody knows what their 403(b) actually costs them. Not because teachers aren't smart about money. Because the fees are built into these products in ways that are genuinely hard to see.

Two things changed recently that make this worth revisiting. The 2026 contribution limits went up meaningfully. And the Social Security rules that penalized public employees for decades were repealed, which changes the retirement math for a lot of educators.

What Changed for Teachers Recently

The WEP and GPO were repealed

For decades, two rules called the Windfall Elimination Provision and the Government Pension Offset reduced Social Security benefits for public employees who also had a pension. If you taught in a non-Social-Security state, worked other jobs that did pay into Social Security, and then found your benefit slashed, that's what happened.

The Social Security Fairness Act, signed in January 2025, repealed both. The change was retroactive to January 2024, and the Social Security Administration estimated roughly 3.2 million people were affected, with an average monthly increase around $360.

If you built your retirement plan assuming your Social Security would be reduced, that assumption is no longer correct. This is worth actually recalculating, not just noting.

The 2026 limits went up

Here's where things stand for this year:

• 403(b) elective deferral: $24,500
• Age 50 and older catch-up: an additional $8,000, for $32,500 total
• Ages 60 through 63: an enhanced catch-up of $11,250 instead of $8,000
• 15-year service catch-up: up to $3,000 more per year, $15,000 lifetime maximum
• Roth IRA, for comparison: $7,500, plus $1,100 catch-up at 50 and older

One new rule for 2026: if your prior-year wages from your employer exceeded $150,000, your age-based catch-up contributions have to be made as Roth rather than pre-tax. The 15-year service catch-up is exempt from that requirement.

403(b) Basics, Briefly

A 403(b) is a tax-deferred retirement plan available to employees of public schools and certain nonprofits. It's named for the section of the tax code that governs it. Contributions typically go in pre-tax, grow tax-deferred, and are taxed as ordinary income when you withdraw.

If you participate in a state teacher retirement system like STRS Ohio, your 403(b) supplements that pension. If you don't participate in one, your 403(b) is carrying much more weight, and the questions below matter even more.

Should Every Teacher Contribute to a 403(b)?

Not automatically. It depends on what your plan looks like.

If your district's 403(b) options are expensive annuity products with surrender charges, contributing beyond any employer match may not serve you well. A Roth IRA at a low-cost provider gives you better investment options and full control, though at a much lower contribution ceiling.

The order I generally walk clients through: capture any employer match first, then build an emergency fund, then compare what your 403(b) actually costs against what a Roth IRA would cost you, and decide from there. Your situation may point somewhere different, which is the entire reason to look rather than assume.

Six Questions to Ask About Your 403(b)

1. What am I paying in total, including fees I can't see?

Nothing is free, and in the 403(b) world the costs are often layered: the investment's expense ratio, a separate administrative or "mortality and expense" charge if it's an annuity, and sometimes an advisor fee on top.

Some of the products I've reviewed cost several times what a comparable mutual fund would. That difference compounds against you for your entire career.

Ask specifically: what is my all-in annual cost as a percentage, and are there surrender charges if I move this money?

CalSTRS maintains a free comparison tool at 403bcompare.com. It's built for California districts, so your employer may not be listed, but many of the same providers and products appear nationally and it's a useful way to see what you're holding.

2. Is this account an annuity, and if so, why?

A large share of the 403(b) accounts I see are annuities sold through insurance companies. That's a historical artifact of how these plans were built, not a sign that an annuity is the right tool for you.

Annuities can serve a real purpose in some retirement plans. But they carry costs that make sense only if you're using the feature you're paying for. If you're decades from retirement and your goal is growth, it's fair to ask why your money is in an insurance product rather than an investment one.

3. Is there a Roth option?

Many districts now offer a Roth 403(b). Contributions go in after-tax, and qualified withdrawals after age 59½ come out tax-free.

The value here is control. Having both pre-tax and Roth money at retirement lets you manage which bucket you draw from and what that does to your taxable income in any given year. Whether Roth or traditional makes more sense for you comes down largely to whether you expect a higher or lower tax bracket later, which is worth working through rather than guessing.

4. Are you a fiduciary?

A fiduciary is legally required to put your interests ahead of their own. Many people selling 403(b) products in school districts are not fiduciaries, and that distinction shows up directly in what you're sold and what it costs.

You're allowed to ask this question plainly. "Are you acting as a fiduciary with respect to this recommendation?" A straight answer tells you a lot. So does a non-answer.

5. Do I also have access to a 457(b)?

This is the one most teachers miss, and it's the biggest missed opportunity on the list.

If your district offers both a 403(b) and a governmental 457(b), the contribution limits are separate rather than shared. For 2026 you could contribute $24,500 to each, for $49,000 total, before any catch-up contributions.

Most people never find out they have both, because nobody tells them. Ask your benefits office directly.

6. Do I qualify for the 15-year service catch-up?

If you've worked at least 15 years for the same qualifying employer, your plan may let you contribute an extra $3,000 per year, up to $15,000 over your lifetime. This stacks with the age-based catch-up, so a long-tenured teacher over 50 could potentially use both.

Two caveats. Plans aren't required to offer it, and some are dropping it. And the calculation depends on your contribution history, so your plan administrator has to confirm your eligibility.

Not Enrolled Yet?

Start by asking your district for the list of approved providers. Districts often have a dozen or more on the list, and they are not equivalent. Compare costs before you pick, because moving later can trigger surrender charges.

If the list is all high-cost annuity products, that's useful information too. It may mean contributing enough to capture any match and directing the rest elsewhere.

Frequently Asked Questions

What is the 403(b) contribution limit for 2026?

$24,500 in elective deferrals. If you're 50 or older you can add an $8,000 catch-up for $32,500 total. Ages 60 through 63 get an enhanced catch-up of $11,250 instead of $8,000.

Can I contribute to both a 403(b) and a 457(b)?

Yes, if your employer offers both. The limits are separate, not shared, so for 2026 you could contribute $24,500 to each for $49,000 total before catch-up contributions. This is one of the most underused opportunities available to public school employees.

Can teachers contribute to both a 403(b) and a Roth IRA?

Yes, assuming you meet the Roth IRA income limits. The 2026 Roth IRA limit is $7,500, plus a $1,100 catch-up at 50 and older. Holding both gives you pre-tax and after-tax money to draw from in retirement.

Did the WEP repeal affect teachers?

Yes. The Social Security Fairness Act, signed January 2025, repealed both the Windfall Elimination Provision and the Government Pension Offset, retroactive to January 2024. Roughly 3.2 million people were affected, with an average monthly benefit increase around $360. Public employees who had their Social Security reduced because of a pension should have their benefits recalculated.

Are 403(b) annuities a bad investment for teachers?

Not automatically, but they're often more expensive than comparable mutual funds and may carry surrender charges. The question to ask is whether you're paying for a feature you'll actually use. If you're years from retirement and investing for growth, it's worth understanding why your money sits in an insurance product.

What is the 15-year rule for 403(b) plans?

Employees with at least 15 years of service with the same qualifying employer may be able to contribute an extra $3,000 per year, up to $15,000 over a lifetime. Plans are not required to offer it, and eligibility depends on your prior contribution history, so confirm with your plan administrator.

One Last Thing

Teachers work hard for our kids. Your retirement money should be working just as hard for you, and too often it isn't, purely because nobody explained what the account was costing.

You don't need to become an expert. You need the answers to six questions. Ask them.

Related reading: 3 Benefits of a Self-Directed 401(k) or 403(b) and Roth IRA vs 401(k): What's the Difference?