403(b)
The workplace retirement plan for public schools, universities, hospitals, and nonprofits.
A 403(b) is the nonprofit-sector equivalent of a 401(k), offered by public schools, colleges, hospitals, churches, and other tax-exempt employers. Elective deferral limits match the 401(k), traditional and Roth versions are both common, and employer contributions may be a match or a straight percentage of salary.
Two differences matter in practice. Investment menus have historically leaned toward annuity products with higher fees than the index funds common in 401(k) plans, so the expense ratio is worth checking rather than assuming. And some plans offer a long-service catch-up provision for employees with 15 or more years at the same employer, separate from the age-based catch-up, which is easy to miss because it is unique to 403(b)s.
For planning purposes a 403(b) behaves like a 401(k): pre-tax contributions lower taxable income now and create future required minimum distributions, Roth contributions do the opposite. Track it alongside your other workplace accounts rather than as a special case.
This definition is general information to help you understand a term, not financial, tax, or legal advice. Figures that change year to year (limits, thresholds, rates) should be confirmed against current official sources. For guidance on your situation, a licensed fee-only fiduciary is the right next step.