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What’s the Difference Between 401(k) and 403(b)?

401(k) and 403(b)

If you’re not taking advantage of the option to invest in a 401(k) or 403(b) at work, you’re throwing money away. Here’s the difference between a 401(k) and 403(b) and how to take advantage of them.

Hear about the differences of 401(k)s and 403(b)s:

The differences between 401(k)s vs 403(b)s

How do employer-sponsored retirement accounts work? How much free money will the organization you work for contribute toward your retirement? And how can participating put you on the road to financial security?

On today’s episode of Queer Money®, we’re sharing all the differences of 401(k)s vs 403(b)s. We explain how employees make contributions to these accounts via a payroll deduction and what types of investments fund administrators put that money toward.

We go on to discuss the similarities between 401(k)s and 403(b)s, weighing in on their like contribution limits, withdrawal fees, and tax-free rollovers. Listen in for insight around what distinguishes the 401(k) from the 403(b) in terms of investment options and learn how participating in your employer-sponsored retirement account can help you achieve financial security!

Topics covered about the difference between a 401(k) and 403(b)

The top ways to achieve financial security

  • Homeownership
  • Employer-sponsored retirement accounts
  • Invest in real estate or stocks

The basics of an employer-sponsored retirement account

  • 401(k) and 403(b) are the most common types
  • Make contributions through payroll deduction
  • Employer, administrator and participant

The difference between a Roth and traditional 401(k)

  • Traditional gets tax break when money is taken out
  • Roth gets tax break at end (when $ withdrawn)

The 3 investments associated with the 401(k) + 403(b)

  1. Mutual funds
  2. ETFs
  3. Managed portfolios

How the 401(k) and 401(b) are alike

  • Contribution limits of $19K, up to $25K for catchup
  • 10% withdrawal penalty before age 59½
  • Employer match up to a certain amount or %
  • Charge to manage plans + transaction fees
  • Tax-free rollover if leave employer (take $ with you)

What unique about the 403(b)

  • Tax-exempt organizations (nonprofit, hospital or school)
  • Typically vest immediately
  • May allow additional $3K/year after 15 years at a job
  • Fewer investment options

What’s unique about the 401(k)

  • For-profit, public companies
  • Usually, require a vesting period
  • Can purchase stock in the company at a lower rate
  • May have access to socially responsible funds


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Retirement is hard enough without having to understand all the rules and types of accounts. Although it is important to know which is right for you. We discuss the difference between 401(k)s and 403(b)s in this episode of Queer Money. #401k #403b #retirement #queermoney #podcast #earlyretirement #FIRE


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