403(b) Plan
A salary-deferral plan for public schools and 501(c)(3) nonprofits.
What is 403(b) Plan?
Works like a 401(k) for employees of public schools, colleges, hospitals, and other tax-exempt organizations. Investments are limited to annuities and mutual funds held in custodial accounts. Shares the same employee deferral limit as a 401(k).
403(b) Plan: a worked example
A public school teacher defers salary into a 403(b) holding a target-date mutual fund.
More terms in Retirement Plans, Accounts & Trading
IRA Rollovers vs. Transfers
60-day rollovers are limited to one a year; direct transfers are unlimited.
10% Early Withdrawal Penalty & Exceptions
Distributions before 59 1/2 cost 10% extra, unless an exception applies.
Solo 401(k)
A 401(k) for a self-employed owner with no employees other than a spouse.
Defined Benefit Plan
A pension promising a specific benefit; the employer bears the investment risk.
Defined Contribution Plan
An individual account plan whose payout depends on contributions and returns.
457 Plan
Deferred compensation for state and local government employees.
SIMPLE IRA
A low-cost plan for employers with 100 or fewer employees.
SEP IRA
An employer-funded IRA plan, up to 25% of compensation.
All Retirement Plans, Accounts & Trading terms · Full glossary