What is the difference between 401k and 403b?

October 01, 2007

Posted by chriscahn

( 1 rating )

Very little thanks to the Economic Growth and Tax Relief Reconciliation Act of 2001, aka EGTRRA.

The plans are not as much different as they are uniquely designated by the US Internal Revenue Code. The main codes are: 401(k), the 403(b), the 401(a) and the 457.

To answer your question, the primary difference between a 401k and a 403b is that the 401k is offered by for-profit businesses, whereas the 403b is offered by not-for-profit business.

And in case you were curious, the 401(a) and the 457 cover employees of state and local governments and some other tax-exempt organizations.

If you are asking the question because your employer is having you to decide between enrolling in either a 401k or a 403b, don't worry. They are essentially the same plan.

Sign in or register to rate or comment on this answer. | Save as Text | Save as PDF | Print