A 403(b) plan is an employer-sponsored retirement plan that will accommodate both salary deferrals from the employee and contributions from the employer if the employer decides to contribute. It may be established by any employer as defined by the Internal Revenue Code under IRC section 501(c)(3), which includes public educational organizations and certain tax-exempt organizations. A 403(b) plan is also known as a Tax-Sheltered Annuity (TSA) Plan.
Employees of public school systems, private colleges and universities, nonprofit hospitals, nursing homes, health clinics, charitable organizations, religious organizations, symphony orchestras, museums, humane societies, and zoos that establish 403(b) retirement plans are eligible to participate.
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.
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Individual accounts in a 403(b) plan can be any of the following types:
Benefits of 403(b) Plans