There is no such thing as a 401(b) plan, but according to the official website of the Internal Revenue Service, a 403(b) plan is a retirement plan similar to a 401(k) plan that allows employees to contribute a portion of their salaries into individual retirement accounts. Employers eligible for this plan include public schools, churches and other tax-exempt organizations.Continue Reading
The numbers of the 403(b) and 401(k) plans refer to the sections of the tax laws that describe them. The main difference between the two is the type of employers that can offer them. However, 403(b) plans also offer a narrower range of investment opportunities. Just as in a 401(k) plan, employers of beneficiaries of 403(b) plans are able to match payroll-deducted contributions, which is an employment incentive. These contributions grow tax-free, often for decades, resulting in a significant increase in the initial investment. The funds are only liable to taxation when they are withdrawn after retirement. However, if the money is withdrawn prematurely for an emergency, there is a significant tax penalty.
The limit on annual additions to a 403(b) plan was $52,000 as of 2014, which is the total amount of employee salary deferrals and employer contributions. This amount can be slightly increased through catch-up provisions. Under the terms of the plan, the participant must begin receiving distributions by April 1 of the year he turns 70.5.Learn more about Financial Planning
A 401(k) is an employer-sponsored retirement plan that allows employees to put tax-deferred dollars into investment accounts to save for retirement, according to 401khelpcenter.com. Your employer may make optional contributions into your retirement account. There are limits to how much you can contribute to these type of accounts.Full Answer >
A 401k plan allows employees to contribute portions of their wages to their respective individual accounts for the purpose of retirement planning. Employees work with their employers to invest in several types of 401k plans.Full Answer >
The 457(b) plan is a type of retirement plan that is only available to state or federal employees or employees of tax-exempt organizations, as of 2015, according to the Internal Revenue Service (IRS). It works in much the same was as other more recognizable retirement plans, such as 401(k) and 403(b) plans and is classified as a non-qualified tax-deferred contribution plan, although the 457 plan allows for withdrawals at any time after leaving a job without any age requirements. Unlike 401(k) plans, withdrawals from 457 plans are penalty free.Full Answer >
The minimum distributions table for individual retirement accounts is posted on the website for the Internal Revenue Service. Failure to withdraw the required amounts can result in a 50 percent excise tax on the amount that was not distributed, explains the IRS.Full Answer >