Updated 2026-03-30
403(b) vs 401(k): What Teachers and Nonprofit Workers Need to Know
Both 403(b) and 401(k) plans offer tax-advantaged retirement savings, but they serve different types of employers. Understanding the differences can help you maximize your benefits.
Key Differences
| Feature | 401(k) | 403(b) |
|---|---|---|
| Employer Type | For-profit companies | Nonprofits, schools, government |
| 2026 Contribution Limit | $24,500 | $24,500 |
| 15-Year Rule | No | Yes (extra $3,000/year) |
| ERISA Coverage | Yes (always) | Sometimes exempt |
| Investment Options | Mutual funds, stocks, etc. | Often annuities + mutual funds |
| Employer Match | Common | Less common |
| Nondiscrimination Testing | Required | Often exempt |
The 403(b) 15-Year Rule
Unique to 403(b) plans: employees with 15+ years of service at the same employer can contribute an additional $3,000 per year (up to a $15,000 lifetime maximum). This is on top of the standard catch-up contributions.
Frequently Asked Questions
If you work for multiple employers, yes. However, the combined employee contribution across all plans cannot exceed $24,500 for 2026. Some school districts offer both 403(b) and 457(b) plans, which have separate limits.
Often yes. Many 403(b) plans use annuity products with higher fees (1-2%+ annually). Some newer 403(b) plans offer low-cost mutual fund options similar to 401(k) plans. Always check your plan fees.
Pavlo Pyskunov
Managing Director & Investment Fund Director
Pavlo Pyskunov analyzes employer-sponsored retirement plans using IRS publications and DOL Form 5500 filings, helping workers maximize their 401(k) savings through data-driven guidance.
Last updated: 2026-03-30