401(k) and 403(b) are both tax-advantaged retirement plans offered by employers to their employees. The primary difference between the two is the type of employer sponsoring the plans. 401(k) plans are offered by private, for-profit companies, whereas 403(b) plans are only available to nonprofit organizations and government employers-defined-contribution-plans/403(b)-vs-401(k)-plans.html). Here are some other differences between the two:
401(k) Plans:
- Offered by private, for-profit companies to eligible employees who contribute pre or post-tax money through payroll deduction-defined-contribution-plans/403(b)-vs-401(k)-plans.html).
- Not subject to income restrictions.
- Subject to nondiscrimination testing.
- Generally offer a bit more in terms of investment options, such as stocks, mutual funds, bonds, and other securities.
403(b) Plans:
- Offered to employees of non-profit organizations and government entities-defined-contribution-plans/403(b)-vs-401(k)-plans.html).
- Exempt from nondiscrimination testing.
- Have income restrictions.
- Can invest in either annuities or mutual funds-defined-contribution-plans/403(b)-vs-401(k)-plans.html).
- Employees who have worked for a qualified organization for 15 years or more may be eligible to make additional contributions.
While 401(k) and 403(b) plans have some differences, they are very similar and offer the same general contribution limits. One is not necessarily better than the other, and its unlikely that an employee will be offered both a 401(k) plan and a 403(b) plan. However, if an employer offers both, employees may contribute to both accounts[[1]](https://www.investopedia.com/ask/answers/10...
