403(b) Plan

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DEFINITION of '403(b) Plan'

A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers.

Generally, retirement income accounts can invest in either annuities or mutual funds.

Also known as a "tax-sheltered annuity (TSA) plan."

BREAKING DOWN '403(b) Plan'

The features of a 403(b) plan are very similar to those of a 401(k) plan. Employees may make salary deferral contributions that are usually limited by regulatory caps. Individual accounts in a 403(b) plan can be any of the following types:

- An annuity contract, which is provided through an insurance company
- A custodial account, which is invested in mutual funds
- A retirement income account set up for church employees

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RELATED FAQS
  1. Is a 401(k) a qualified retirement plan?

    A 401(k) is a qualified retirement plan. Qualified retirement plans must satisfy IRS requirements for both setup and operations. ... Read Full Answer >>
  2. What are the advantages and disadvantages of getting a 403(b) vs. a Roth IRA?

    A 403(b) plan is a retirement account that is offered to public school employees and the personnel of non-profit organizations, ... Read Full Answer >>
  3. Can I roll over a 403b plan?

    Part or all of the funds in a 403(b) plan can be rolled into an eligible retirement plan. Rollovers into a traditional IRA ... Read Full Answer >>
  4. What is the difference between a 401(k) plan and a 403(b) plan?

    Named after sections 401(k) and 403(b) of the tax code, respectively, both 401(k) plans and 403(b) plans are tax-advantaged, ... Read Full Answer >>
  5. Is my 403(b) account owned by me or by the institution?

    You are the owner of your 403(b). The financial institution just holds the assets on your behalf and facilitates your transactions. For ... Read Full Answer >>
  6. I work for a university, and I have a 403(b) with TIAA-CREF. But TIAA-CREF says I ...

    It depends. The IRS does permit the transfer of assets between 403(b) providers; however, employers and 403(b) providers ... Read Full Answer >>
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