403(b) Plan
A type of plan similar to a 401(k) plan, this plan type is only available to certain entities, including non-profit organizations under IRC 501(c)(3), and public Educational and Church organizations. The plan permits employees to defer compensation into the plan on a pre-tax, or in the case of Roth Contributions, post-tax basis.
Advantages:
- Allows employees to elect to defer contributions
- Employer contributions are tax deductible up to 25% of eligible participants compensation
- Employee contributions are tax deferred until taken out at retirement (except in the case of Roth contributions)
- Salary deferrals are not subject to compliance (ADP) testing
- Certain plans may not be subject to ERISA