The Saving Is Not the Hard Part
Most Prisma Health employees who are within three to five years of retirement have done the saving. They have contributed to the 403(b) consistently. They have watched the account grow. They have an idea, however rough, of what their monthly income will look like.
What tends to catch them off guard is the sequencing.
The decision about when to begin Social Security affects the tax picture for years afterward. The decision about when to start drawing from the 403(b) and 401(a) interacts with Social Security in ways that are not obvious. The health coverage gap between leaving Prisma and becoming eligible for Medicare has to be planned for before the last day of work, not after. And the South Carolina tax treatment of retirement income changes depending on age and income level.
These decisions are not independent. They connect. And the order in which you make them determines a significant amount about what the next two decades look like financially.
The 403(b) and 401(a): What You Have and What You Can Do With It
Prisma Health employees approaching retirement have accumulated their savings across two employer-sponsored retirement accounts: a 403(b) plan, to which employees contribute, and a 401(a) plan, which receives employer contributions. Both are administered through Empower. Both are defined contribution accounts, meaning the retirement benefit depends on accumulated contributions and investment performance rather than a formula tied to years of service. Employees who are age 59½ or older can begin accessing funds from both accounts. (Prisma)
The decisions that matter at retirement are not about the accounts themselves. They are about the timing and structure of how you draw from them.
Taking large distributions early in retirement, before Social Security begins, can push you into a higher federal tax bracket in those years. Taking smaller distributions and delaying Social Security can reduce the lifetime tax burden significantly. The right approach depends on your projected income from all sources, your expected Social Security benefit, your healthcare costs in the gap years before Medicare, and your South Carolina tax situation.
None of this is visible from the account balances alone. It requires modeling your income across multiple years before you make any of these decisions.
Social Security: Timing Is the Most Consequential Decision You Will Make
For most Prisma Health employees, Social Security represents a meaningful portion of retirement income. The decision about when to begin claiming is among the most financially significant decisions in the years leading up to retirement.
The full retirement age for people born in 1960 or later is 67. Claiming before full retirement age results in a permanently reduced monthly benefit. Claiming at 70 results in the maximum possible monthly benefit, with delayed retirement credits increasing the payment by 8 percent for each year you delay past full retirement age. (Social Security Administration)
The interaction between Social Security timing and 403(b) distributions is where most planning happens. If you retire at 62 and delay Social Security until 70, you need income to cover those eight years. That income typically comes from the 403(b), the 401(a), savings, or some combination. The tax implications of drawing heavily from the 403(b) in those years vary depending on the amount and your other income. A CPA or financial advisor can model the breakeven point between an earlier, smaller Social Security benefit and a later, larger one given your specific situation.
The Medicare Gap: The Decision That Cannot Wait Until You Leave
Prisma Health employees who retire before age 65 face a gap in health coverage. Medicare eligibility begins at 65. Prisma Health's group health coverage ends when employment ends. For an employee who retires at 62, that gap is three years.
Bridging that gap requires a plan before the last day of work, not after. The options include COBRA continuation coverage, coverage through a spouse's employer plan, or coverage purchased through the federal Health Insurance Marketplace. (SC Department of Insurance) COBRA extends your existing Prisma Health coverage, but at full cost, typically significantly more expensive than what you paid as an active employee. Marketplace plans vary in cost and coverage depending on your projected income in retirement.
The cost of health coverage in the pre-Medicare years is one of the most frequently underestimated expenses in a retirement budget. It is worth calculating this number specifically before finalizing a retirement date.
South Carolina Income Tax in Retirement
South Carolina taxes most retirement income, including 403(b) and 401(a) distributions, at ordinary income tax rates. The 2025 top marginal individual income tax rate is 6 percent. (SC Department of Revenue)
The state provides a retirement income deduction that reduces the taxable amount. Taxpayers under 65 may deduct up to $3,000 of qualifying retirement income annually. At age 65 and older, that deduction increases to $10,000. (SC Department of Revenue)
Social Security benefits are exempt from South Carolina individual income tax, regardless of your federal tax treatment. (SC Department of Revenue) This is a meaningful distinction for retirees who receive both Social Security and 403(b) distributions. The 403(b) and 401(a) income is subject to state tax after the deduction; the Social Security income is not.
At age 65 and older, an additional income deduction of up to $15,000 against any South Carolina taxable income is available, separate from the retirement income deduction. (SC Department of Revenue) The interaction between these deductions and your total income in retirement is worth working through with a CPA before you finalize your drawdown strategy.
The Sequence Problem: Why the Order Matters
The reason Prisma Health retirement planning is more complex than it looks from the account balances is that each of these decisions affects the others.
The retirement date determines when the Medicare gap begins and how long it lasts. The retirement date also determines when you need income from the 403(b) and 401(a) if you delay Social Security. The timing and amount of retirement account distributions determines your federal and state taxable income in those years. Your taxable income in those years affects how much of your Social Security benefit is taxed once you begin claiming. Your income level also affects your Medicare premium once you reach 65, through the income-related monthly adjustment amount, or IRMAA, which increases Part B and Part D premiums for higher-income beneficiaries. In 2026, IRMAA applies to individuals with modified adjusted gross income above $109,000 (single filers) or $218,000 (joint filers), based on tax returns from two years prior. Total monthly Part B premiums for affected beneficiaries range from $284.10 to $689.90 in 2026. (Kiplinger) IRMAA is a cliff surcharge: exceeding the threshold by even one dollar triggers the full surcharge for that bracket. Income planning in the years immediately before Medicare eligibility can reduce or eliminate this cost. (Social Security Administration)
None of these decisions is made in isolation. They are made in sequence. Getting the sequence right before the retirement date is set is the most valuable planning work available to a Prisma Health employee in the three to five years before retirement.
The Four Professionals and What Each One Does
Navigating retirement from Prisma Health well typically involves four distinct professionals. None of them fully covers the others' territory.
An estate attorney handles the legal side of retirement planning at this asset level: updating beneficiary designations on the 403(b) and 401(a) accounts, reviewing spousal survivor benefit elections, and ensuring the overall estate structure reflects the employee's intentions now that retirement account balances represent a significant share of net worth. For Prisma Health employees with $1M or more in combined retirement assets, a pre-retirement estate review is not a formality. The decisions made here — particularly beneficiary designations — supersede the will and cannot be corrected after the fact. The SC Bar Lawyer Referral Service (scbar.org) is a starting point for employees who do not already have an estate attorney relationship.
A CPA handles the tax side: projecting income across the first several years of retirement, modeling the interaction between 403(b) and 401(a) distributions and Social Security timing, and identifying the most tax-efficient drawdown strategy given the South Carolina and federal tax picture. This work should happen before the retirement date is set, not after.
A benefits specialist or HR contact at Prisma Health handles the plan administration side: confirming vested balances in both the 403(b) and 401(a), understanding distribution options, and addressing questions about COBRA eligibility and timing. Prisma Health's HR and benefits team can provide the plan documents that describe specific options. Contact them well before the intended retirement date.
A financial advisor handles the investment and income planning: modeling the multi-year income picture, coordinating the timing of distributions, Social Security claiming, and healthcare costs, and adjusting the plan as circumstances change. The financial advisor engages after the estate and tax foundational work has been completed.
Most employees navigating this transition benefit from all four. If you do not currently have relationships with any of them, a referral from a trusted colleague or professional contact is the most reliable starting point
If you are a Prisma Health employee within three to five years of retirement and you have $1M or more in your 403(b), 401(a), and other investable assets, we work with Columbia-area employees navigating exactly this transition.
We can help you model the sequencing of your retirement decisions before your last day of work — so the decisions that cannot be undone are made with a complete picture.
To schedule a 30-minute or 60-minute conversation, in person or virtually: https://oncehub.com/Brad-Blackburn
Brad Blackburn is a registered representative of LPL Financial.