403(b) Before Retirement for Teachers: 7 Things to Review in 2026

Many educators hired in the 1990s and 2000s are now inside the ten-year retirement window. The rules they will retire into have moved: the SECURE 2.0 Act changed catch-up limits and required-minimum-distribution ages, and the fee landscape of K-12 403(b) menus rewards a fresh reading of an old contract.

This article is aimed at teachers and school staff aged roughly 55 to 65, within about ten years of retirement, who hold an accumulated 403(b) balance and face allocation, consolidation, and distribution-setup decisions. It presents the decision categories in educational terms. It does not recommend investments, allocations, or products - those are personal-facts questions this article cannot answer.

Why the final decade changes the 403(b)’s job

Near retirement, a 403(b) stops being afar-off accumulation account and becomes one of the instruments that will pay the monthly bills - alongside a pension and, for many educators, Social Security. That changes which features matter. Growth still counts, but the cost of holding the account, its exposure to a poorly timed downturn, and the mechanics of getting money out start to carry equal weight.

The pension it sits beside shapes the assignment. A KPERS benefit pays no automatic cost-of-living adjustment in any tier, so the 403(b) is often the household’s main tool for keeping purchasing power level across a long retirement. A PSRS benefit adjusts differently - cost-of-living adjustments are voted annually by the PSRS/PEERS Board under a policy tied to inflation bands, with a 5% annual cap and a lifetime cap of 80%of the original benefit. Which system a teacher retires on, and under which rules, is tier - and date-specific - the account’s job description follows from it.

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Category one: investment posture as the date approaches

The structural risk of the final decade is timing: a significant market decline close to the retirement date, encountered just as withdrawals begin, leaves fewer working years to recover and can permanently lower what the account supports. Planners call this sequence-of-returns risk. It is a reason many near-retirees revisit how their403(b) balances growth assets against more stable holdings - not a rule about what any individual should hold.

The question to weigh is not “what allocation is right for a 60-year-old” - no general article can say - but whether the account’s current posture was set years ago and never revisited, and whether it still matches the retirement date now circled on the calendar. How Educators Can Avoid Running Out of Money in Retirement, linked below, treats longevity and sequence risk in more depth.

Category two: what the current contract costs

Cost is the feature a near-retiree can read directly off the paperwork, and in K-12 403(b) menus it varies widely by vendor and product. Three categories are worth checking in the current contract: the expense ratios of the underlying investments, any wrap or administrative fee charged on top, and - on annuity-based 403(b) contracts - any surrender schedule that applies a charge to withdrawals or transfers within a stated period.

Surrender schedules deserve particular attention in the final decade because their clocks interact with the retirement date: a charge period that has already run out is a different fact from one that would restart under a new contract. None of this implies a particular product is wrong - it means the fee pages and the surrender terms are worth knowing before any distribution or consolidation decision is made.

Category three: accounts left behind in previous districts

Teaching careers that crossed districts often leave a trail of 403(b) accounts, each with its own vendor, cost structure, and paperwork. Near retirement, the practical question is whether the household can still see the whole picture: what each account holds, what each costs, and how each will behave at distribution time. Reviewing them together - whatever is then decided - beats discovering a forgotten contract at72.

Consolidation is a choice with trade-offs, not a default: transfer rules, surrender schedules, and the receiving plan’s terms all bear on it, and one rule cuts the other way for RMD purposes - required minimum distributions from 403(b) contracts may be calculated per contract and then withdrawn from any one or more of the owner’s 403(b)contracts, an aggregation flexibility other employer plans do not share. What Happens to Your Pension if You Change School Districts?, linked below, covers the pension side of a multi-district career.

Category four: the final-decade contribution window

The last working years carry the largest contribution capacity of a career. For the 2026 tax year the elective deferral limit is $24,500; the age-50 catch-up adds $8,000; and in the years a teacher turns 60 through 63, the SECURE 2.0 Act’s enhanced catch-up of $11,250 replaces the age-50 amount, where the plan permits. The 403(b) 15-year service catch-up - the least of $3,000 a year, $15,000 lifetime, or $5,000 × service years minus prior deferrals, after 15 years with the same employer - can add room on top.

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How the 403(b) will sit next to the pension and SocialSecurity

A retirement paycheck for an educator is typically assembled from a pension that arrives monthly for life, Social Security where the career earned it, and withdrawals from the 403(b) and any457(b). The design question of the final decade is sequencing: which source starts when, and what the 403(b) is asked to cover in the years before other sources begin.

Timing rules frame the options. Separation from service during or after the calendar year a teacher reaches age 55 is an exception to the 10% additional tax on early 403(b) distributions; a governmental 457(b) balance is generally free of that tax after separation at any age. An educator retiring under PSRS’s Rule of 80 or KPERS’s early-retirement provisions may lean on those rules for the bridge years. How Educators Can Create a Retirement Paycheck That Lasts for Life, linked below, takes up the sequencing question in full.

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Required minimum distributions: the end of the runway

Required minimum distributions (RMDs) currently begin at age 73 for those born from 1951 through 1958, and at 75 for those born in 1960 or later, as the IRS’s final regulations (TD 10001, July2024) implement the SECURE 2.0 Act. For educators born in 1959 the statute describes the same person under both the age-73 and the age-75 clauses; the IRS’s proposed regulations (REG-103529-23, July 2024) would resolve this at 73,and as of the publication date those proposed rules had not been finalised (IRS Announcement 2026-7 still refers to future final regulations). A reader born in1959 should plan on 73 - the IRS’s proposed position and the more conservative assumption - and confirm the final rule with a qualified adviser once it isissued.

Two further rules matter for planning the runway. Designated Roth accounts in 401(k) and 403(b) plans have no lifetime RMDs beginning with the 2024 distribution year. And a participant still working for the plan sponsor may generally delay RMDs from that current employer’s plan until the year of retirement, where the plan allows - a rule relevant to educators who keep teaching past 73. What Every Teacher Needs to Know About Required Minimum Distributions, linked below, covers the mechanics.