403(b) Plan

AAA

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."

INVESTOPEDIA EXPLAINS '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

RELATED TERMS
  1. Eligible Automatic Contribution ...

    Also known as EACAs, these were created as part of the Pension ...
  2. Qualified Automatic Contribution ...

    Also known as QACAs, these were established under the Pension ...
  3. TIAA-CREF

    A nonprofit organization that provides investment and insurance ...
  4. 401(k) Plan

    A qualified plan established by employers to which eligible employees ...
  5. Voluntary Employees Beneficiary ...

    A tax-free post-retirement medical expense account used by retirees ...
  6. 457 Plan

    A non-qualified, deferred compensation plan established by state ...
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 >>
Related Articles
  1. Retirement

    Roth Feature Boosts Benefits For 401(k) And 403(b) Plans

    Roth accounts tend to beat Traditional plans over the long term by providing tax savings.
  2. Savings

    Financial New Year's Resolutions You Can Keep

    Start the year off right by evaluating your financial health and setting impactful and achievable goals.
  3. Retirement

    Top 9 Benefits Of A 403(b) Plan

    Find out how the 403(b) plan helps employees of nonprofit entities meet their retirement goals.
  4. Retirement

    403(b) Plan Tutorial

    Learn about the set-up, the contributions to and the distributions from this retirement plan for certain employees of public schools and tax-exempt organizations.
  5. Retirement

    Some Tax Considerations For Your Retirement Income

    Even if you don’t plan to retire, it’s still a good idea to think ahead about where to live, your income and how it all interacts with Social Security.
  6. Retirement

    Top 7 Cities For Retiring In Thailand

    Beautiful Thailand has beaches, cities, affordable health care, plus cultural attractions and great cuisine, No wonder it's popular with expat retirees.
  7. Retirement

    Track Your Retirement Money With These Apps

    Try these four mobile and online apps to stay on top of your retirement income – in brokerage accounts, IRAs, 401(k)s, even Social Security.
  8. Mutual Funds & ETFs

    Should GE Be Part of Your Portfolio?

    Here's what you need to consider if you are thinking of adding GE to your portfolio.
  9. Professionals

    Advisors: Don't Overlook Not-Yet-Rich Millennials

    Financial advisors looking to grow their practices should focus on potential high-net-worth millennials.
  10. Retirement

    Top 10 Stocks for Retirement Portfolios

    Certain stocks are popular retirement portfolio options, but not all are as impressive as they used to be. Time to reevaluate?

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center