You’re ready to make progress with your retirement planning. As part of your employee benefits package, you know your employer will match a portion of the contributions you make to their retirement vehicle. But your employer is offering a 403b plan rather than the 401K plan you were expecting. What is the difference? What is a 403b plan, exactly? We have the answers.

The basics

Generally offered to employees nonprofit organizations, as well as some types of hospital organizations and educational institutions, 403(b) programs, are tax-sheltered annuity (TSA) plans that are similar to a 401(k). The type of plan you are part of depends on what your employer is offering based on their organizational structure. It isn’t generally possible for you to choose your plan. However, participants in both types of savings vehicles will have a range of investment options with a variety of risk levels.


How much of your income should you invest in a 403(b)? Most financial planning experts strongly recommend that you invest enough to make the most out of the employer’s match. This match is basically free money and it can go a long way to helping you save for retirement.

Employer transitions

Leaving one job to work for another employer can be a challenging time. There are lots of details to consider as you make the change. It may be reassuring to know that transitioning any retirement funds in a 403(b) plan can be relatively simple.

These funds can be rolled into other accounts similarly to the way that you would transition money from other retirement plans. As with funds in any other account, you may want to talk to an investment professional to understand tax implications for the types of accounts you’ll be moving the funds into. You’ll also want to talk to them about the timing of when you are planning to make an investment change.