BACKNEXT

How is a 403(b) different from a 401(k)?

The main difference is the type of employers who can offer them. Unlike 401(k) plans which are offered by for-profit companies, 403(b) plans are only available to employees of tax-exempt organizations. These are usually either schools, hospitals or religious groups. The names simply refer to the section of the tax code that outlines these plans.

For the most part, the two types of plans work the same way. But there are other subtle differences. For example, 403(b) plans will sometimes offer more limited investments choices than corporate plans, which might consist of annuity contracts and mutual funds. But that may change due to new regulations set to go into effect in 2009, which aim to make 403(b)s even more like 401(k)s. While 401(k)s frequently have vesting schedules spread out over a few years, many 403(b)s vest immediately, or over a shorter period of time than in their cousins in the for-profit world.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.