When it comes to planning for retirement, it’s crucial to explore different investment options that align with your long-term financial goals. For employees of nonprofit organizations, a 403(b) retirement plan offers a valuable opportunity to save and grow funds for the future. In this article, we will delve into what a 403(b) plan is, how it works, and the benefits it provides. What is a 403(b) Plan? A 403(b) plan, also known as a tax-sheltered annuity (TSA) plan, is a retirement savings vehicle designed for employees of certain tax-exempt organizations, such as educational institutions, hospitals, and nonprofit organizations. The name “403(b)” comes from the corresponding section of the Internal Revenue Code that governs these plans. How Does a 403(b) Plan Work? Similar to a 401(k) plan, a 403(b) plan allows eligible employees to contribute a portion of their salary to the plan on a pre-tax basis. The contributions are deducted from the employee’s paycheck before taxes are applied, which reduces their taxable income for the year. This tax advantage means that the contributions and any investment earnings grow tax-deferred until retirement when withdrawals are made.