401k vs 403b Comparison Chart: A Detailed Guide

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Table 1: Key Differences

Feature	401k	403b
Employer Type	For-profit organizations	Public schools and other tax-exempt organizations
Contribution Limits	Higher ($22,500 in 2023, $30,000 for those age 50 and older)	Lower ($22,500 in 2023, $30,000 for those age 50 and older)
Catch-up Contributions	Allowed ($7,500 in 2023)	Not allowed
Employer Matching	Yes	Sometimes
Vesting	May vary depending on employer	Always fully vested
Withdrawal Options	Loans and early withdrawals allowed	Loans and early withdrawals usually not allowed
Tax Treatment	Contributions made pre-tax; withdrawals taxed as ordinary income	Contributions made pre-tax or Roth (after-tax); withdrawals taxed as ordinary income or tax-free

Table 2: Contribution Limits

Age	401k	403b
Under 50	$22,500	$22,500
50 and older	$30,000	$30,000

Table 3: Investment Options

Plan Type	Investment Options
401k	Stocks, bonds, mutual funds, target-date funds
403b	Similar to 401k, but may also offer annuities

Table 4: Withdrawal Options

401k vs 403b comparison chart

Plan Type	Withdrawal Options
401k	Loans, early withdrawals (subject to penalties)
403b	Loans (not always allowed), early withdrawals (subject to penalties)

Which One is Right for You?

The best choice between a 401k and a 403b depends on your individual circumstances. Here are some key factors to consider:

Employer Type: If you work for a for-profit organization, you will most likely have a 401k plan. If you work for a public school or other tax-exempt organization, you will likely have a 403b plan.
Contribution Limits: 401k plans typically have higher contribution limits than 403b plans. If you are looking to save more for retirement, a 401k may be a better option.
Investment Options: Both 401k and 403b plans offer a wide range of investment options. However, 403b plans may offer more options, such as annuities.
Withdrawal Options: 401k plans generally offer more flexible withdrawal options than 403b plans. 401k plans allow for loans and early withdrawals, while 403b plans typically do not.

Not contributing enough: The biggest mistake you can make is to not contribute enough to your retirement savings. Aim to save at least 10% of your income for retirement.
Investing too conservatively: Don't be afraid to invest in stocks and other growth-oriented investments. Over the long term, stocks have outperformed bonds and other conservative investments.
Taking withdrawals early: Withdrawing money from your retirement savings early can cost you a lot of money in the long run. Withdrawals are subject to taxes and penalties, and you will lose out on the potential growth of your investments.