Difference between 401A and 403B

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Latest post Sat, Apr 28 2007 11:18 AM by carol3. 1 replies.
  • Wed, Apr 11 2007 12:05 PM

    Question [=?] Difference between 401A and 403B

    Recently, our pension plan in a city school system changed from 403B (which we had for years) to a 401A. I tried to look up the differences, advantanges and disadvantages but really don't understand it. Can anyone explain the differences, advantages and disadvantages of having a 401A over a 403B? Was this just cheaper for the employer? Thank you.
  • Sat, Apr 28 2007 11:18 AM In reply to

    • carol3
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    Feedback [*=*] re: Difference between 401A and 403B

    The 403(b) is a tax deferred retirement plan available to employees of educational institutions and certain non-profit organizations as determined by section 501(c)(3) of the Internal Revenue Code.

    401(a) Retirement Plans are sometimes referred to as Teacher Incentive and Teacher Matching programs.

    Basically in these type 401a plans the school district employer decides on some sort of match provision or the employer makes some sort of direct contribution to the plan.

    Unlike 403b plans, no employee contributions are permitted in a 401a plan.

    Each state has specific laws and different rules pertaining to these 401a plans.

    You need to seek counsel of a financial planner or discuss with your union financial representative.

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