403(b) vs 401(k) — What's the Difference? (2026 Comparison)

A 403(b) is essentially the nonprofit and public school version of a 401(k). Same contribution limits, same tax treatment, but different employers and a few unique rules.

Model your contributions with the 401(k) Calculator — including a special catch-up provision that 401(k) plans don't have→

Side-by-Side Comparison

Feature	401(k)	403(b)
Who offers it	Private companies	Nonprofits, schools, churches, hospitals
2026 employee limit	$23,500	$23,500
Catch-up (50+)	$7,500	$7,500
Super catch-up (60-63)	$11,250	$11,250
15-year service catch-up	No	Up to $3,000/year extra
Total limit (employee + employer)	$70,000	$70,000
Roth option	Yes (most plans)	Yes (many plans)
Traditional (pre-tax) option	Yes	Yes
Employer match	Common	Less common
Investment options	Mutual funds, target-date, etc.	Often annuities + mutual funds
Loan provisions	Usually available	Usually available
Required Minimum Distributions	Age 73	Age 73
ERISA protection	Yes	Sometimes (government plans exempt)

The Key Differences

1. Who Qualifies

401(k): Available at for-profit employers of any size.

403(b): Available only at:

Public school districts (K-12)
Public universities
501(c)(3) nonprofits
Churches and religious organizations
Some hospitals

If you're a teacher, professor, hospital worker, or nonprofit employee, you likely have a 403(b).

2. Investment Options

This is the biggest practical difference:

401(k): Typically offers mutual funds, index funds, and target-date funds selected by the employer.

403(b): Historically heavy on annuity contracts (from insurance companies like TIAA), though many plans now also offer mutual fund options. Annuities often have higher fees and surrender charges.

Watch out for fees: Some 403(b) annuity products charge 1-2%+ in annual fees. Compare this to a low-cost index fund at 0.03-0.10%. Over 30 years, that fee difference can cost you hundreds of thousands of dollars.

3. The 15-Year Service Catch-Up

This is unique to 403(b) plans. If you've worked for the same eligible employer for 15+ years, you may contribute an additional $3,000/year (up to a lifetime max of $15,000) on top of the standard limits.

Contribution Type	Amount
Base limit	$23,500
15-year service catch-up	$3,000
Age 50+ catch-up	$7,500
Maximum (15-year + 50+)	$34,000

This stacks with the age-50 catch-up. A teacher who's been in the same district for 20 years and is over 50 could contribute up to $34,000 in employee deferrals.

4. Employer Match

401(k) plans commonly offer employer matching. 403(b) plans are less likely to match, especially at public schools. Some universities and hospitals do offer generous matches (often through TIAA).

5. ERISA Protection

Most 401(k) plans are covered by ERISA (Employee Retirement Income Security Act), which provides fiduciary protections and prohibits excessive fees.

Government 403(b) plans (public schools) are generally exempt from ERISA, meaning less oversight and potentially higher fees. Church plans may also be ERISA-exempt.

Tax Treatment: Identical

Both plans offer the same tax treatment:

Tax Feature	401(k)	403(b)
Traditional (pre-tax) contributions	Reduce taxable income	Reduce taxable income
Roth (after-tax) contributions	No current deduction	No current deduction
Tax-deferred growth	Yes	Yes
Taxed on withdrawal	Yes (Traditional)	Yes (Traditional)
Tax-free withdrawal	Yes (Roth)	Yes (Roth)
10% penalty before 59½	Yes (with exceptions)	Yes (with exceptions)

What to Do If Your 403(b) Options Are Poor

Many 403(b) plans — especially at public schools — have limited, high-fee options. Strategies:

Contribute enough to get any employer match (free money)
Look for the lowest-cost option in your plan (often a target-date fund or index option)
Max out a Roth IRA separately ($7,000/year at a low-cost brokerage)
Advocate for better options — many school districts have added Vanguard or Fidelity as plan providers after teacher advocacy
Use a 457(b) if available — some government employees can contribute to both a 403(b) and a 457(b) with separate limits

The 457(b) Double-Up

Government employees (but not nonprofit employees) may have access to both a 403(b) and a 457(b) plan. These have separate contribution limits:

Plan	2026 Limit
403(b)	$23,500
457(b)	$23,500
Combined	$47,000

Plus catch-up contributions. This is one of the most powerful retirement savings opportunities available.

Project your 403(b) retirement growth→

Rollover Rules

When you leave your employer:

Rollover From	Rollover To	Allowed?
403(b)	Traditional IRA	Yes
403(b)	Roth IRA	Yes (taxable conversion)
403(b)	New 401(k)	Yes (if plan accepts)
403(b)	New 403(b)	Yes
401(k)	403(b)	Yes (if plan accepts)

The rollover process is the same as a 401(k) rollover — request a direct trustee-to-trustee transfer to avoid taxes and penalties.

FAQ

Is a 403(b) as good as a 401(k)?

The tax benefits are identical. The main differences are investment options (403(b) may have higher-fee annuities) and employer matching (less common in 403(b)). A 403(b) with good low-cost fund options is just as effective as a 401(k).

Can I have both a 401(k) and a 403(b)?

Yes, if you have two jobs — one offering each. The combined employee contribution limit is $23,500 total across both plans.

Should I choose the annuity or mutual fund option in my 403(b)?

Almost always the mutual fund option. Annuities in 403(b) plans frequently have higher fees and surrender charges. The tax-deferral benefit of an annuity is redundant inside an already tax-deferred 403(b).

Do teachers get a pension and a 403(b)?

Many public school teachers have a state pension plan (defined benefit) plus access to a 403(b) (defined contribution). The 403(b) supplements the pension. This is actually a strong combination — guaranteed pension income plus tax-advantaged savings.