403(b) Plans function similarly to 401(k) plan by allowing employees to defer a portion of their salary on a pre-tax or Roth (after-tax) basis into a retirement account.

Employers may choose to make matching or discretionary contributions, though this is not required. Like 401(k) plans, 403(b)s are subject to annual IRS contribution limits and offer tax-deferred growth until distribution.

403 (b) Plans provide a flexible and tax-advantaged way for nonprofit and public sector employers to help their employees save for retirement—while also offering plan sponsors the ability to support long-term financial security and retention goals.