What is a 403(b) Plan?

403(b) plan is a deferred compensation program that is offered to employees of a tax-exempt organization or employees of certain educational organizations. Contributions must be made to annuity contracts or to custodial accounts investing in mutual funds. Because section 403(b) plans originally had to be invested only in annuity contracts, these plans are sometimes referred to as "tax-sheltered annuity" plans. A reference to a tax-sheltered annuity or "TSA" is generally recognized as not only a reference to a 403(b) annuity, but also as a reference to a 403(b) custodial account or 403(b) retirement income account.



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