403 (b)
A tax-deferred retirement plan offered by nonprofit organizations, public schools, and municipal agencies that are unable to participate in 401(K) plans. Generally, 403(b) plans follow 401(k) rules for contributions, rollover, and withdrawals. You contribute to the plan via payroll deduction. Your income taxes are deferred on the contribution and any plan earnings until you withdraw the funds, which you can do without penalty at age 59½. You must start making withdrawals after age 70½.

Many employers allow participants to borrow from their 403(b) funds. But it is not as common for employers to match employee contributions. Investment choices are typically more limited than 401(k) plans. The plans are often funded as annuities, but companies may also offer a family of mutual funds.