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Author: ephelps24 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75838  
Subject: 403b Date: 12/7/1998 10:24 PM
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I am looking for a comparison between 403b and 401k plans. I know they are similar, but I am looking specifically for the differences. I have heard that a 403b cannot be rolled to an IRA, is this true? Is there a comprehensible interpretation of the laws regarding these two plans? Thanks in advance for the Foolish advice.

- Ernie
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Author: JPrazen Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7112 of 75838
Subject: Re: 403b Date: 12/9/1998 12:01 AM
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<<I am looking for a comparison between 403b and 401k plans.>>

You are right that the two types of retirement plans are very similar. Since you're probably already familiar with the similarities, I guess I'll dive right into the differences:

403b plans were established with non-profit organizations in mind, as an answer to the 401a plans that were already available to for-profit organizations. The main difference between the two types of plans is the maximum IRS allowances for pretax contributions into them.

In some cases, 403b's are a bit more restrictive on how much you can contribute than 401a's; in other cases, you may be able to contribute as much as $13,000 in pretax contributions to a 403b in a given year. This depends on many different factors, though, and you should always consult a tax advisor before jumping to any conclusions on how much you can contribute.

A couple other differences exist in the fact that 403b's offer some grandfathering provisions, allowing a break on Minimun Required Distributions for account balances held prior to 1987, and additional hardship distribution allowances for account balances held prior to 1989.

Hope this helped you out a bit.

JP

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7124 of 75838
Subject: Re: 403b Date: 12/9/1998 1:54 PM
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Greetings, Ernie, and welcome. You asked:

<<I am looking for a comparison between 403b and 401k plans. I know they are similar, but I am looking specifically for the differences. I have heard that a 403b cannot be rolled to an IRA, is this true? Is there a comprehensible interpretation of the laws regarding these two plans? Thanks in advance for the Foolish advice.>>

Jprazen gave you some of the differences, but somehow missed the major one. A 403b plan may have but two investment options: Annuities and/or mutual funds. A 401k plan has a much broader range of available options to include participant self-directed accounts within which they may purchase individual securities. For a brief description of both the 401k and 403b plans, see my Foolish Retirement Plan Primer at http://www.fool.com/retirement .

Regards….Pixy



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