403b - Offered by a variety of Vendors
A 403(b) plan is a tax advantaged retirement savings plan available for public education organizations, some non-profit employers (only US Tax Code 501(c)(3) organizations) and self-employed ministers in the United States. It has tax treatment extremely similar to a 401(k) plan, especially after the Economic Growth and Tax Relief Reconciliation Act of 2001. Simply put, employee salary deferrals into a 403(b) plan are made before income tax is paid on it, and allowed to grow tax deferred until the money is taxed as income when taken out of the plan. Beginning in 2006, 403(b) and 401(k) plans may also include designated Roth contributions, i.e., after-tax contributions, which, if certain requirements are met, will allow tax-free withdrawals. Primarily the designated Roth contributions have to be in the plan for at least five taxable years.The Employee Retirement Income Security Act (ERISA) does not require 403(b) plans to be technically "qualified" plans, i.e., plans governed by US Tax Code 401(a), but have the same general appearance as qualified plans. The option is available but it is not known how prevalent or if any 403(b) has been started or amended to be ERISA qualified because the main advantage of ERISA plans for participants has been in bankruptcy of the account holder which has been removed by the October 2005 Bankruptcy Abuse Prevention and Consumer Protection Act. However, they are very different in some fundamental ways. To the participant, the plan appears almost exactly the same and the options available are very similar. The only important differences for the participant are some additional ways that they can withdraw employer money, not salary-deferral money, before the typical 59 1/2 age restriction, but only if the plan is funded with annuities, not mutual funds. The government is proposing that this difference be eliminated in proposed regulations that are expected to be finalized in