A 403(b) plan, commonly referred to as a "tax sheltered annuity plan", is a type of Defined Contribution Pension Plan available only to employees of educational and charitable organizations, which enables such employees to make contributions to the plan before taxes. Contributions made to the plan reduce the employees' taxable income while saving for retirement. Contributions and earnings thereon are not taxed until they are withdrawn from the plan. Employer contributions can also be made in a 403(b) arrangement, in the form of either a matching contribution or a profit sharing contribution.
Types of Pension Plans: 403(b) |