What Are Some Common 403(b) Questions and Answers?


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Some common 403(b) questions include who can invest in a 403(b), whether part-time workers can participate and if a 403(b) offers a brokerage option, notes Investopedia. As of 2015, 403(b) plans are for employees of some tax-exempt organizations, teachers and certain ministers. Part-time workers can participate if they work at least 20 hours per week. The plans only allow investment in mutual funds, so participants cannot directly invest in stocks.

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Another question regarding 403(b) plans is how they differ from a 401(k) plan, reports CNN. The biggest difference is the type of employer who can offer them. For-profit companies can offer 401(k) plans, while 403(b) plans are available to employees of tax-exempt organizations. This generally includes religious groups, schools and hospitals. The name of the plan refers to the section of the tax code that regulates the plan.

The two plans generally work in the same way, CNN explains. However, there are some differences. A 403(b) plan limits investment choices. Also, 401(k) plans have vesting schedules that spread out over time, and many 403(b) plans allow immediate vesting over a shorter period of time.

Another question is whether the employee should invest in a 403(b) plan or consider an IRA, according to U.S. News & World Report. With an IRA plan, the employee may want to consider the better opportunity for investment and the ability to change his investment whenever he likes.

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