What's a 403(b)

Most readers are familiar with 401(k) retirement plans offered by many employers but what are 403(b) plans?

Schools, non-profits, charities, hospitals and religious organizations offer these retirement vehicles which have very similar attributes to 401(k) plans, most notably tax deferment. Most 403(b) plans are covered by the Employee Retirement Income Security Act of 194 (ERISA) and is overseen by the Department of Labor. This protects workers and assures that employers are committed to the best interests of plan participants.

Governmental and church 403(b) plans are exempt from ERISA. This means that they are covered by state laws or less stringent federal regulations. All 403(b) plans must follow IRS regulations for proper operation and administration.