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What is the difference between a 401k and a 403b retirement plan?
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The main difference between a 401k and a 403b retirement plan is that a 401k is offered by for-profit employers, while a 403b is offered by non-profit, tax-exempt organizations. A 401k plan allows employees to set aside a portion of their salary from each paycheck and invest it in stocks, bonds, or mutual funds. Withdrawals from a 401k plan are generally taxed as ordinary income. A 403b plan also allows employees to save for retirement, but with different rules than a 401k. Contributions are made with before-tax dollars and taxes are deferred on both the contributions and any investment gains until money is withdrawn.