If you work for a school, hospital, museum, foundation or other non-profit, tax-exempt employer, you may be offered a 403(b) instead. Similar to 401(k)s, there are traditional 403(b)s and Roth 403(b)s. The same contribution minimums and distribution requirements that apply to 401(k)s apply to these plans. However, your investments are restricted to annuities and mutual funds - only those that your employer offers.

However, you may be able to roll over your 403(b) to a 401(k) if you change jobs and the new plan accepts rollovers. And you can always roll over your 403(b) assets to an IRA when you retire or change jobs. Then you can use the investment alternatives available in the new plan or IRA.

What's the Difference?

Though they have different names, tax-sheltered annuities (TSAs) and tax-deferred annuities (TDAs) are actually 403(b)s.

This material is for informational purposes only and Scottrade is not responsible for any errors or omissions. The information is subject to change without notice and should not be construed as a recommendation or investment advice. Please consult your tax or legal advisor(s) for questions concerning your personal tax or financial situation.