ECONOMICS
SAVING AND INVESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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They are plans offered through employers.
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They offer some tax benefits.
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They restrict when you can withdraw your money.
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All of the above
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Detailed explanation-1: -The main difference between a 403(b) and 401(k) is the type of employer who offers them. 401(k) plans are offered by private, for-profit companies. 403(b) plans, on the other hand, are offered by tax-exempt and nonprofit organizations.
Detailed explanation-2: -Therefore, you can contribute to both a 401(k) and a 403(b), but your total combined contributions to both cannot exceed $20, 500 in 2022 ($22, 500 in 2023), or $27, 000 in 2022 if you’re 50 or older ($30, 000 if you’re 50 or older in 2023).
Detailed explanation-3: -What is the difference between a 401k and a 403b retirement plan? basic difference is that a 403b is used by nonprofit companies, religious groups, school districts, and governmental organizations. The law allows these organizations to be exempt from certain administrative processes that apply to 401k plans.
Detailed explanation-4: -A 401(k) plan is a qualified plan that includes a feature allowing an employee to elect to have the employer contribute a portion of the employee’s wages to an individual account under the plan. The underlying plan can be a profit-sharing, stock bonus, pre-ERISA money purchase pension, or a rural cooperative plan.