There are always new retirement plans that are being introduced and offered to employees from their human resources department. You may have overhead a conversation about a person being setup in a new 403(b) retirement fund, and your curious what the difference may be with a 401k vs 403b plan. First of all unless you work for a specific type of not for profit organization then you will not be eligible for the this retirement plan. The 401k plan is made for employees who work at companies that are setup to profit from their sales and services.
Actually if you lay out both the 401k and the 403(b), then you will see that the 401k is a much better retirement tool than the 403 plan. Since their employers are not for profit, they are not given tax incentives to match what the employee puts into the account so there is no motivation to help the employee financially. The 403 plan is usually offered for employees that work for schools, religious organizations, and some hospitals. The reason a number is used for the title is that is the code in the tax laws that this retirement plan references, and is the same for the 401k.
People who have the 403 plan would probably prefer having a 401k, but until the tax laws change, they will be stuck with their current offering. The only away around this is to open a individual 401k account, but the benefit of the employer participating would still not be present. The tighter management and laws protecting the investor concerning the 401 would be the only benefit that the account holder would realize over the 403 plan. The not for profit retirement package is not maintained by the employer, and outside companies have to hired to manage the accounts, and administer changes when employees request them.
This can cause excessive management fees to the employee that will prevent them from benefiting in anyway by participating in the retirement plan. As these accounts are not as important to financial management companies, due to the fact that their corporate accounts are more profitable to them as a whole. So, in the end be glad you have your 401 program, as you will benefit much more than your not for profit counterpart. They may only realize half or less than what you will eventually rack up in investment money, and profits from the stocks and bonds in your portfolio.