403(b) vs 401(k): What's the Difference?
A 403(b) and a 401(k) share the same contribution limits and many of the same rules, but a 403(b) is only available to employees of public schools, universities, hospitals, and certain nonprofits. A 401(k) is offered by private-sector employers.
The core difference: who offers the plan
A 401(k) is an employer-sponsored retirement plan available to employees of private companies. A 403(b) is structurally similar but is restricted to employees of tax-exempt organizations under IRC Section 501(c)(3) — primarily public schools, universities, hospitals, and churches. If you work for a public school or nonprofit hospital, you may have a 403(b) instead of (or alongside) a 401(k).
Side-by-side comparison
| Feature | 403(b) | 401(k) |
|---|---|---|
| Eligible employers | Public schools, universities, hospitals, 501(c)(3) nonprofits | Private-sector and some public employers |
| 2026 elective deferral limit | $24,500 | $24,500 |
| 2026 catch-up (age 50+) | $8,000 | $8,000 |
| Employer match | Plan-specific; less common | Common but plan-specific |
| Roth option | Some plans offer it | Some plans offer it |
| Investment options | Often annuities and mutual funds | Typically mutual funds |
| Governing law | IRC Section 403(b) | IRC Section 401(k) |
Which is better?
In most cases, you don't choose between them — your employer offers one or the other based on the type of organization you work for. If you have access to both (some hospitals and universities offer both), compare the employer match, fees, and investment menu. A 401(k) with a generous match will usually beat a 403(b) without one, but a low-fee 403(b) with good investment options can be excellent.
Frequently asked questions
Can I contribute to both a 403(b) and a 401(k)?
If you have access to both through the same employer or different employers, the combined elective deferral limit applies — you cannot exceed the annual limit across both plans.
Do 403(b) plans have lower fees?
Not necessarily. 403(b) plans historically offered annuity products with higher fees, but many now offer mutual funds with competitive expense ratios. Check your plan's specific fees.
Is a 403(b) the same as a 401(k) for tax purposes?
Both allow pre-tax and Roth contributions, and both follow the same elective deferral limits. The tax treatment is essentially the same.
Sources
Gleefund explains general retirement-account concepts and provides estimates. It does not provide financial, tax, or legal advice. See our disclaimer and methodology. Check the current IRS rules before acting.
Figures current as of 2026-09-25. Found an error? Contact us.