403(b) vs. 401(k) Plans: Benefits & Differences

403(b) plans and 401(k) plans are very similar but with one key difference: whom they’re offered to. While 401(k) plans are primarily offered to employees in for-profit companies, 403(b) plans are offered to not-for-profit organizations and government employees.

403(b) Plan vs. 401(k) Plan Comparison Chart

The following chart compares the contribution limits for 403(b) plans and 401(k) plans.

	403(b) Plans	401(k) Plans
Maximum Annual Contribution	$23,500	$23,500
Age 50 Catch-up Limit	$7,500	$7,500
Special Catch-up Limit	$15,000 lifetime cap	None
Age 60–63 Catch-up Limit*	$11,250	$11,250
Offered to	Not-for-profit and government employees	Employees at for-profit companies, and some public service employees

* As per a change via SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63. For 2025, this higher catch-up contribution limit is $11,250. This option is effective as of January 1, 2025 for plans that elect to adopt it. Limitations may apply as defined by the plan. Please contact your plan administrator should you require additional information.

The Benefits of 403(b) and 401(k) Plans

Both 403(b) plans and 401(k) plans allow you to contribute money, pre-tax, from your paycheck. That money then grows, tax-deferred, until you withdraw the funds in retirement. At that time, they’re taxed as ordinary income.

Both plans therefore allow you grow your retirement savings without paying annual taxes, unlike regular savings where you pay taxes on the interest they earn.

Both plans may also have Roth contribution options, which allow you to make after-tax contributions — rather than pre-tax contributions — if you want. The contributions are taxed as income, then withdrawn tax-free in retirement.

401(k) plans and 403(b) plans both also have annual contribution limits. See the contribution limits for this year.

Each plan gives you the opportunity to contribute extra catch-up payments once you reach age 50. After 50, you can contribute more than the annual contribution limits, every year, to maximize your retirement savings. Both plans allow participants aged 60, 61, 62 and 63 to contribute an additional $11,250 on top of the normal (not age-50) limit*.

403(b) plans have an additional "Special Catch-Up" provision that 401(k) plans do not offer. With a 403(b) plan, you can contribute an extra $15,000 over your career, provided you have been with your employer for at least 15 years. You can get specific calculations that apply to your circumstance by contacting the plan sponsor or recordkeeper.

Can you have a 403(b) and a 401(k)?

Because 401(k) plans are generally offered to employees of for-profit companies, it's unlikely you will be offered both a 403(b) plan and a 401(k). An employee typically has access either to a 401(k) plan or a 403(b) plan, depending on whether they are in a for-profit company or a not-for-profit or public sector organization.

However, there are some circumstances in which an employer will offer both a 403(b) plan and a 401(k) plan. If this is the case, you can contribute freely to both, up to the annual contribution limits for this year.

What's better: 401(k) or 403(b)?

401(k) plans and 403(b) plans offer very similar benefits. As such, one isn’t really better than the other. The main difference is that each plan is offered to employees of different types of companies. Another key difference between the plans is that 403(b) plans also offer a $15,000 catch-up.

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* As per a change via SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63. For 2025, this higher catch-up contribution limit is $11,250. This option is effective as of January 1, 2025 for plans that elect to adopt it. Limitations may apply as defined by the plan. Please contact your plan administrator should you require additional information.