403 (b)

An alternative retirement plan to a 401(k) plan offered by non-profit organizations such as universities and charitable organizations, rather than corporations. There are advantages to 403(b) plans: contributions lower taxable income, larger contributions can be made to the account, earnings can grow tax-deferred, and some plans allow loans. Contributions grow tax-deferred until withdrawal. Withdrawals are taxed as ordinary income (which is sometimes a disadvantage).


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