A 403(b) plan, also known as a tax-sheltered annuity (TSA) plan, is a retirement savings plan designed for certain employees of public schools, tax-exempt organizations, and certain ministers. Similar to a 401(k) plan, a 403(b) plan allows employees to contribute to their retirement savings on a tax-advantaged basis. Here are the key features of a 403(b) plan:

### 1. **Employee Contributions:**

– **Salary Deferrals:**
– Employees can make contributions to their 403(b) accounts through salary deferrals. These contributions are made on a pre-tax basis, meaning they reduce the employee’s taxable income for the year.

– **Contribution Limits:**
– The IRS sets annual limits on the amount employees can contribute to their 403(b) accounts. Additionally, there are catch-up contributions allowed for individuals age 50 and older.

### 2. **Employer Contributions:**

– **Employer Contributions:**
– Some employers may offer matching contributions or other employer contributions to the 403(b) plan. The employer’s contribution policies vary, and not all employers make contributions.

### 3. **Tax Advantages:**

– **Tax-Deferred Growth:**
– Contributions and any investment gains in a 403(b) account grow on a tax-deferred basis. Taxes on contributions and earnings are deferred until the employee makes withdrawals in retirement.

### 4. **Investment Options:**

– **Investment Choices:**
– Participants in a 403(b) plan typically have a range of investment options to choose from. These may include annuities, mutual funds, and other investment vehicles.

### 5. **Withdrawal Rules:**

– **Distribution Age:**
– Withdrawals from a 403(b) plan are generally allowed penalty-free after the age of 59½. Early withdrawals may be subject to a 10% early withdrawal penalty, in addition to regular income taxes.

– **Required Minimum Distributions (RMDs):**
– Similar to other retirement plans, starting at age 72 (or 70½ for those who reached 70½ before January 1, 2020), participants are required to take minimum distributions from their 403(b) accounts each year.

### 6. **Portability:**

– **Job Changes:**
– When employees change jobs, they often have the option to roll over their 403(b) account into an Individual Retirement Account (IRA) or into the 403(b) plan of their new employer.

### 7. **Plan Administration:**

– **Plan Types:**
– 403(b) plans may come in different forms, including custodial accounts, annuity contracts, and retirement income accounts. The plan structure depends on the employer’s choice.

– **Plan Administrator:**
– The employer typically designates a plan administrator to oversee the 403(b) plan and ensure compliance with regulatory requirements.

### 8. **Nonprofit and Educational Organizations:**

– **Eligible Employers:**
– Eligible employers include public schools, colleges, universities, hospitals, churches, and other tax-exempt organizations.

### 9. **Regulatory Compliance:**

– **IRS Regulations:**
– 403(b) plans are subject to IRS regulations, and employers are responsible for ensuring the plan complies with these rules.

– **Non-Discrimination Testing:**
– Employers may need to perform non-discrimination testing to ensure that the plan does not disproportionately benefit highly compensated employees.

403(b) plans provide employees in the non-profit and educational sectors with an opportunity to save for retirement in a tax-advantaged manner. Employees should review the specifics of their employer’s 403(b) plan and consider seeking financial advice to make informed decisions about their retirement savings.