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Personal Finance

Navigating the (Often-Confusing) 403(b) Landscape

Dan Otter, an educator and 403(b) specialist, discusses retirement-plan tips and traps for educators and other workers in the nonprofit sector.

In many respects, 403(b) plans--retirement savings plans for nonprofit entities such as museums, charitable organizations, and public schools--are just like 401(k) plans. Participants contribute a portion of their paychecks, and the savings grow tax-deferred (or even tax-free--many 403(b) plans now offer a Roth option). The contribution limits are the same for both types of plans.

A crucial difference, however, is that many 403(b) plans venture beyond the usual 401(k) staples of index funds and target-date vehicles and into more costly products, including variable annuities. We recently interviewed Dan Otter, whose website, 403bwise.com, aims to help investors make sense of the often-confusing 403(b) marketplace. Otter discussed the 403(b) landscape and shared tips for 403(b) participants aiming to sift among a confusing array of choices.