401(k) vs. 403(b): What's the Difference?

Short answer: The main difference in a 401(k) vs. 403(b) is who can offer the plan. The IRS says traditional and safe harbor 401(k) plans are available to employers of any size. Only public schools and other public educational institutions and 501(c)(3) tax-exempt organizations can offer a 403(b). For 2026, both plans have the same IRS contribution limit of $24,500, and both let you save from your paycheck before taxes or as Roth contributions if the plan allows. Some 403(b) plans also offer an extra catch-up for long-time employees.

What Is the Difference Between a 401(k) and a 403(b)?

For savers, the two plans work in a similar way: money comes out of each paycheck and goes into your account, either before taxes or, if the plan allows, as Roth contributions. The differences are mostly in who can offer the plan, how the money is invested and the catch-up rules.

	401(k)	403(b)
Who can offer it	Employers of any size (traditional and safe harbor plans)	Only public educational institutions and 501(c)(3) tax-exempt organizations
How the money is invested	Varies by plan	Annuity contracts through an insurance company, custodial accounts invested in mutual funds, or church retirement income accounts
2026 employee limit	$24,500	$24,500
Age 50+ catch-up (2026)	$8,000 ($11,250 at ages 60–63)	$8,000 ($11,250 at ages 60–63)
Special 403(b) 15-year catch-up	Not applicable	Yes, if the plan allows it
Roth contributions	If the plan allows them	If the plan allows them

Who Can Offer a 403(b) Plan?

The IRS is specific: "Only public educational institutions or 501(c)(3) tax-exempt organizations may establish a 403(b) plan." People who can take part include:

• Employees of 501(c)(3) tax-exempt organizations
• Employees of public schools who are involved in the day-to-day operations of a school
• Employees of cooperative hospital service organizations
• Certain ministers, depending on their employer and role

A 401(k) has no such restriction. The IRS notes that traditional and safe harbor 401(k) plans are available to employers of any size. A smaller version, the SIMPLE 401(k), is limited to employers with 100 or fewer employees who received at least $5,000 in pay in the prior calendar year.

How Are 403(b) Investments Different From 401(k) Investments?

This is where 403(b) plans stand out. According to the IRS, a 403(b) account can be set up as:

1. An annuity contract, provided through an insurance company
2. A custodial account, invested in mutual funds
3. A retirement income account for church employees, invested in annuities or mutual funds

Because a 403(b) can be invested through annuity contracts, it's worth reading your plan's fee disclosures carefully. Ask what each investment charges, whether there are surrender charges for moving money out of an annuity contract, and what lower-cost choices are on the menu. If you'd like help reading the disclosure, our guide to checking a financial adviser's background shows how to vet anyone you hire.

Are the 401(k) and 403(b) Contribution Limits the Same?

Yes. For 2026, the IRS set one employee contribution limit for 401(k) plans, 403(b) plans, governmental 457 plans and the federal Thrift Savings Plan:

Your age in 2026	Employee limit	Standard catch-up	Total
Under 50	$24,500	None	$24,500
50 to 59, or 64 and older	$24,500	$8,000	$32,500
60 to 63	$24,500	$11,250	$35,750

These limits apply to your own contributions. For more on the 2026 numbers, see our guide to 401(k) and IRA contribution limits for 2026.

What Is the 403(b) 15-Year Catch-Up?

Some 403(b) plans offer a special catch-up that 401(k) plans don't have. To use it, you need at least 15 years of service with the same qualifying employer. Service with different organizations generally can't be combined, except for church-related organizations.

The IRS sets the extra amount as the smallest of three numbers:

• $3,000
• $15,000, minus any special catch-up amounts you used in earlier years
• $5,000 times your years of service, minus your earlier elective deferrals to that employer's plans

That formula sets a lifetime limit of $15,000 of extra deferrals. If your plan allows both this catch-up and the age-50 catch-up, the IRS applies the 15-year catch-up first, then the age-50 catch-up. Your plan administrator can tell you whether you qualify and how much you can add.

Can You Have Both a 401(k) and a 403(b)?

Yes. You might have a 401(k) at one job and a 403(b) at another, for example if you work for both a private company and a 501(c)(3) nonprofit. The limit is the catch. The IRS says elective deferrals to 401(k) and 403(b) plans "must be aggregated," so your combined contributions to both can't go over your single annual limit.

Here's a hypothetical example for 2026. Say you're 45 and work two jobs, one with a 401(k) and one with a 403(b):

	Contribution
Your deferrals to the 401(k)	$15,000
Most you could still defer to the 403(b)	$9,500
Combined total	$24,500 (your 2026 limit under age 50)

If you make deferrals to more than one plan, keep a running total so your combined deferrals stay within your limit.

A governmental 457(b) plan is different. Its limit is separate, so deferrals to a 457(b) aren't combined with your 403(b) or 401(k) deferrals.

Do 403(b) Plans Have to Follow ERISA?

Not every 403(b) plan is subject to ERISA. The IRS says governmental plans, non-electing church plans and plans that meet the Department of Labor's safe-harbor requirements are generally not subject to ERISA. A 403(b) plan that is subject to ERISA must give participants information such as a summary plan description and meet other fiduciary duties.

403(b) plans have another rule, called universal availability. The IRS says that if an employer lets one employee make salary deferrals, it generally must offer the same chance to all employees. Employers can exclude some groups, such as employees who would contribute $200 or less a year or who normally work fewer than 20 hours a week.

Which Should You Choose?

Which plan you can join depends on your employer, so the useful questions are about the plan you have:

• Does the employer match, and what's the formula? Find out how much you need to contribute to get the full match. See our guide to how much to contribute to your 401(k), which applies to 403(b) savers too.
• What do the investments cost? Compare expense ratios and any annuity contract charges in your fee disclosure.
• Does the plan offer a Roth option?
• Are you eligible for the 15-year catch-up?
• Does your employer also offer a 457(b)? It has its own separate limit.

The Bottom Line

A 401(k) and a 403(b) share the same 2026 IRS contribution limits. A 403(b) is only for public education and 501(c)(3) employers, can be invested through annuity contracts or mutual fund custodial accounts, and may offer an extra catch-up after 15 years of service. Whichever plan you have, focus on the match, the fees and your contribution rate. Our retirement savings calculator can show how your contributions could add up.

Frequently asked questions

Is a 403(b) the same as a 401(k)?

They work in a similar way. Both let you defer part of your pay into a tax-advantaged retirement account, and they share the same annual IRS limit. The main differences are which employers can offer them, how the money can be invested, and a special catch-up contribution that only some 403(b) plans offer.

Which is better, a 401(k) or a 403(b)?

Neither type is better on its own. Which one you can join depends on your employer. What matters more is the specific plan: its investment choices, its fees and whether your employer adds a match. Read your plan's documents and fee disclosures to compare.

Can I contribute to both a 401(k) and a 403(b)?

Yes, if you have access to both, for example through two jobs. But the IRS says your elective deferrals to 401(k) and 403(b) plans must be added together, so your combined contributions can't go over your one annual limit ($24,500 for 2026 if you're under 50). A governmental 457(b) plan has its own separate limit.

What is the 403(b) 15-year catch-up?

If your 403(b) plan allows it and you have at least 15 years of service with the same qualifying employer, you may be able to contribute up to $3,000 more a year, with a $15,000 lifetime cap. The exact amount comes from an IRS formula, and if your plan also allows the age-50 catch-up, the special 15-year catch-up is applied first.

Does a 403(b) have to be offered to all employees?

Generally, yes. Under the IRS universal availability rule, if a 403(b) employer lets one employee make salary deferrals, it must offer the same chance to all employees. Employers can exclude some groups, such as employees who would contribute $200 or less a year or who normally work fewer than 20 hours a week.

Sources

1. IRS: IRC 403(b) Tax-Sheltered Annuity Plans
2. IRS: 401(k) Plan Overview
3. IRS: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 (IR-2025-111)
4. IRS: 403(b) Plans - Catch-Up Contributions
5. IRS: How Much Salary Can You Defer if You're Eligible for More Than One Retirement Plan?

This guide is general information, not personal advice. Your situation may differ, so consider talking with a qualified professional, such as a fiduciary financial adviser, CPA or licensed agent, before making a decision.