Compare Non-Profit Plan Options
Use this non-profit retirement plan comparison chart to compare the differences between a 401(k) and a 403(b).
Non-Profit Retirement Plan Comparison Chart
The two most common retirement plans for non-profit organizations are 401(k) and 403(b). These plan types are similar but also have some differences. This chart compares 401(k) and 403(b) plans side by side, covering eligibility, compliance, contribution limits, and investment options.
|
401(k)
|
403(b)
|
|
|---|---|---|
|
What it is
|
An employer-sponsored defined
contribution plan for business entities |
An employer-sponsored defined
contribution plan for non-profit entities |
|
Who can Sponsor
|
Any business entity
*Non-profit entities have the option of sponsoring a 401(k) or a 403(b) |
Non-profit organizations, hospitals, schools,
churches, 501(c)3 tax-exempt entities |
|
ERISA-Covered
|
Yes
|
Sometimes
|
|
Form 5500 Required
|
Yes
|
Only if ERISA-covered
|
|
Nondiscrimination Testing
|
Must pass annual nondiscrimination testing
|
Exempt from certain compliance testing
|
|
Annual Contribution Limit
|
$23,500 (+$7,500 catch-up
contribution for age 50+) |
$23,500 (+$7,500 catch-up
contribution for age 50+) |
|
Tax Treatment
|
Contributions are made pre-tax and
grow tax-deferred |
Contributions are made pre-tax
and grow tax-deferred |
|
Investments Allowed
|
Mutual funds, stocks, bonds, annuities,
collective-funds |
Only annuities or mutual funds
|
|
Collective Funds-Eligible
|
Yes
|
No (unless a 403(b)9 church plan)
|
|
Employee Eligibility
|
Can be limited to:
• Age 21 or over • 1,000 hours of service per year • 12 months of service |
Employee Contributions:
No eligibility limits Employer Contributions: Same eligibility limits as 401(k) |
|
Eligible for Maximum Allowable Contribution
(MAC Rule) |
No
|
Yes. Employees who have 15+ years of service with a qualified organization may qualify to contribute an additional $3,000 annually to the plan.
|
learn more about
Non-Profit Plans
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