403(b) and 457(b) Plans
403(b) and 457(b) plans are tax-deferred retirement savings programs provided by certain employers. Employers such as public educational institutions (public schools, colleges, and universities), certain non-profits, and churches or church-related organizations may offer 403(b) plans. Employers such as state and local government agencies and certain non-profit organizations may offer 457(b) plans. Some employers offer both 403(b) and 457(b) plans and allow you to contribute to both plans. Contact your employer to find out if both plans are available.
Similar to traditional 401(k) plans, 403(b) and 457(b) plans allow you to contribute pre-tax money from your paycheck to your 403(b) or 457(b) plan account to invest in certain investment products. These pre-tax contributions and their investment earnings will not be taxed until you withdraw the money, typically after you retire.
Typically, 403(b) and 457(b) plans offer two types of investment products – mutual funds and annuities. Shares of a mutual fund are securities and are regulated by the SEC. An annuity is a contract between you and an insurance company. Depending on the type of annuity, it may be regulated by state insurance commissions and/or the SEC.
For additional information on these rules and tax consequences, please consult a tax professional.
The SEC does not regulate or oversee retirement plans such as 403(b) and 457(b) plans. You can find general tax information about these plans on the Internal Revenue Service’s (IRS) website (IRS 403(b) webpage, IRS 457(b) webpage). Some 403(b) plans must comply with the Employee Retirement Income Security Act (ERISA). Please visit the U.S. Department of Labor’s 403(b) plan webpage to learn more about the ERISA requirements for these plans.
