There is no such thing as a 401(b) plan, but according to the official website of the Internal Revenue Service, a 403(b) plan is a retirement plan similar to a 401(k) plan that allows employees to contribute a portion of their salaries into individual retirement accounts. Employers eligible for this plan include public schools, churches and other tax-exempt organizations.Know More
The numbers of the 403(b) and 401(k) plans refer to the sections of the tax laws that describe them. The main difference between the two is the type of employers that can offer them. However, 403(b) plans also offer a narrower range of investment opportunities. Just as in a 401(k) plan, employers of beneficiaries of 403(b) plans are able to match payroll-deducted contributions, which is an employment incentive. These contributions grow tax-free, often for decades, resulting in a significant increase in the initial investment. The funds are only liable to taxation when they are withdrawn after retirement. However, if the money is withdrawn prematurely for an emergency, there is a significant tax penalty.
The limit on annual additions to a 403(b) plan was $52,000 as of 2014, which is the total amount of employee salary deferrals and employer contributions. This amount can be slightly increased through catch-up provisions. Under the terms of the plan, the participant must begin receiving distributions by April 1 of the year he turns 70.5.Learn more about Financial Planning
The maximum amount that a worker can elect to contribute to a 401(k) retirement plan was $17,500 in 2014 and $18,000 as of 2015, according to the Internal Revenue Service. The amount is often increased from one year to the next to address cost-of-living adjustments.Full Answer >
Under the Internal Revenue Code, a 403(b) plan is a retirement plan that can be offered to employees of public schools, employees of certain 501(c)(3) tax-exempt organizations and eligible church ministers. This type of retirement savings plan allows participants to make pre-tax contributions, and earnings on the contributions are not taxed until they are distributed from the plan.Full Answer >
Most qualified retirement plans, including pensions, allow employees to borrow against them and then repay the plan with interest, according to Investopedia. One benefit of taking a loan against a retirement account over other types of loans is that interest is repaid directly to the account.Full Answer >
A 457 retirement plan is a retirement savings account offered to government employees and some employees of nonprofit organizations, states CNN Money. Advantages over other retirement plans include no penalties for early withdrawals and enhanced catch-up contribution options, reports Kiplinger.Full Answer >