The market for the 403(b) plan (also known as a tax-sheltered annuity [TSA] plan) is clearly defined by the Internal Revenue Code. For public school employees and employees of tax-exempt hospitals and other non-profit employer groups, which are not eligible for the qualified retirement plans available to for-profit businesses, the 403(b) plan is really the only option available when it comes to employer-sponsored plans.
As with a 401(k) plan, contributions to a 403(b) plan are based largely on employee salary deferrals. Made on a pre-tax basis, these deferrals reduce current income for the participating employee. Employers may make matching contributions. Contribution limits are the same as they are with traditional 401(k) plans.
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