403(b) account

This type is one of multiple tax-friendly investing accounts and is only available to US citizens and residents.

What is a 403(b)?

A 403(b) is a retirement savings plan that is offered by many public schools and non-profit organizations. Employees can contribute on a pre-tax basis, which can help to lower your taxable income. Contributions to a 403(b) grow tax-deferred, which means that you won’t have to pay taxes on the money until you withdraw it during retirement.

Subtypes

There are many different types of 403(b) plans, but they all have some basic features in common. For example, most plans allow you to make catch-up contributions if you are over the age of 50. Additionally, most plans have a vesting schedule, which means that you will only own the money in your account if you stay with the organization for a certain period of time.

Difference 403b to 401k

The main difference between a 403(b) and a 401(k) plan is that a 403(b) is only available to employees of certain public schools and non-profit organizations, while a 401(k) is available to employees of any type of company.

Additionally, 403(b) plans often have more restrictions than 401(k) plans. For example, 403(b) plans often have a vesting schedule, which means that you will only own the money in your account if you stay with the organization for a certain period of time.

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