403(b)
A tax-advantaged retirement plan for employees of public schools, nonprofits, and tax-exempt organizations.
What is 403(b)?
A 403(b) is a tax-advantaged retirement savings plan for employees of public schools, universities, hospitals, and other nonprofit organizations. It functions similarly to a 401(k): employees contribute pre-tax (Traditional) or after-tax Roth dollars, funds grow tax-deferred, and withdrawals in retirement are taxed as income. For 2025, the contribution limit matches the 401(k) at $23,500 ($31,000 for those 50+). Many employers offer matching contributions. Teachers and nonprofit employees often use 403(b)s as their primary retirement vehicle alongside pension plans that may still be available in these sectors.
Example
A public school teacher earning $55,000 contributes 8% ($4,400) to a 403(b). The school district matches 50% up to 5% of salary ($1,375). Total annual contribution: $5,775, growing tax-deferred toward retirement.
Source: IRS — 403(b) Plans