IRC 403(b) Plans
Certain employers are allowed to have Internal Revenue Service (IRC) 403(b) Tax-Sheltered Annuity plans. You are allowed to have a 403(b) plan if you are:
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A public school, college or university,
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A church,
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A public hospital, or
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A charitable entity tax-exempt under section 501(c)(3) of the Code.
Basically, 403(b) plans are similar to 401(k) plans maintained by for-profit entities. Just as with a 401(k) plan, a 403(b) plan lets employees defer some of their salary. In this case, their deferred money goes to a 403(b) plan sponsored by the employer. This deferred money generally does not get taxed by the federal government or by most state governments until distributed. This is just as it is with 401(k) plans. If you establish a 403(b) plan, you can have other retirement plans and you may need to file Form 5500.
IRC 457 Plans
Plans of deferred compensation described in IRC section 457 are available for certain state and local governments and non-governmental entities tax exempt under IRC 501. They can be either eligible plans under IRC 457(b) or ineligible plans under IRC 457(f). Plans eligible under 457(b) allow employees of sponsoring organizations to defer income taxation on retirement savings into future years. Ineligible plans may trigger different tax treatment under IRC 457(f).
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