403(b)(7) Plans

The 403(b)(7) Custodial Account is a retirement plan commonly available to employees of hospitals, schools, churches and other 501(c)(3) non-profit organizations. Due to recent changes in the 403(b) regulations, employers are now required to adopt a written plan document and establish agreements with any outside vendors of the plan. The participant's employer must sign a 403(b)(7) Plan Service Provider Agreement before they can establish a 403(b)(7) Custodial Account with Principal Trust Company.

How the Plan Works:

• The participant's employer completes and signs the 403(b)(7) Plan Service Provider Agreement.
• The participant establishes a 403(b)(7) Custodial Account with Principal Trust Company by completing the 403(b)(7) Savings Account Application.
• The participant chooses from mutual fund investments offered by a designated brokerage firm.
• The participant sets aside money for retirement on a pre-tax basis through a salary reduction agreement with his/her employer.
• The employer sends contributions to the brokerage firm to be invested.
• Contributions and investment earnings grow tax-deferred until retirement.
• Withdrawals may be made upon a distributable event, as outlined in the Principal Trust 403(b)(7) Custodial Account Agreement. Distributions are taxed as ordinary income.

To find out how much can be contributed, visit our plan limits page.