Definition
The 401(k) equivalent offered by public schools, universities, churches, and many nonprofits. The mechanics, tax treatment, and limits closely mirror a 401(k).
Why it matters
Teachers and nonprofit workers sometimes assume they lack a real retirement plan because the name is unfamiliar. A 403(b) carries the same tax advantages, and ignoring it leaves the same compounding and any match unclaimed.
Example
A public school teacher contributes pre-tax dollars to a 403(b) exactly as a private-sector worker would to a 401(k): payroll deduction, untaxed growth, and taxes due only on withdrawal in retirement.
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.