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403(b) Plan

What is a 403(b) plan?

A 403(b) plan is a tax-sheltered retirement savings plan for employees in tax-exempt organizations like public schools, hospitals, and nonprofits.

Like 401(k) plans, 403(b)s let employees contribute pretax dollars to a retirement savings account. Employers offering 403(b)s can also match employee contributions like 401(k)s from for-profit organizations. Employees who choose to leave the organization that offers their 403(b) can roll over their assets into an IRA.

The main difference between 401(k)s and 403(b)s is the former is allowed to hold annuities, mutual funds, stocks, and bonds, while the latter can only hold annuities and mutual funds.