403b

403b plans are only available to non-profit, tax exempt organizations such as hospitals, schools, foundations etc. that fall under Section 501(c)(3) of the Internal Revenue Code. 403b plans are identical in most ways to 401k plans. However, 403b plans unlike 401k plans are not covered under ERISA provisions. 403b Participants may defer on a pre-tax basis from their paycheck in 2011 up to $16,500 annually (note if over age 55 the catch-up contribution is $5,500). Employees participating in 403b plans have only two investment choices; annuities or mutual funds. The monies accumulated in the account are not taxed until withdrawn. For employees mobility remains an advantage of 403b plans, while their limited investment options are a severe disadvantage.