Teacher at Her Desk

403(b) Plans

The IRS permits certain employers to offer 403(b) tax-sheltered annuity plans. Qualifying employers include:

  • Public schools, colleges or universities
  • Churches
  • Public Hospitals
  • A 501(c)(3) charitable entity

In essence, 403(b) plans are much like the 401(k) plans that are maintained by for-profit entities. Just like a 401(k) plan, a 403(b) plan lets employees defer some of their salary. In the 403(b) situation, the employee's deferred money goes to a 403(b) plan sponsored by the employer. This deferred money generally does not get taxed by the Federal government or by most state governments until it is distributed, just like a 401(k) plan.

Starting in 2006, the IRS began allowing 401(k) or 403(b) plans (but not SARSEPs or SIMPLE IRA plans) to permit an employee to irrevocably designate some or all of their elective contributions under the plan as designated Roth contributions.


This Web site is intended for general information purposes only. It does not nor is it intended to constitute legal, tax or investment advice. Alliance America is not a lawyer, registered investment advisor or investment advisor representative, and is not engaged in the practice of law or the business of investment advice.