403(b) vs. 401(k) vs. 457(b)—what's the difference?

401(k) vs. 403(b) vs. 457(b) comparison chart

Each time you start a new job, the retirement plan will change, and there are many kinds of retirement plans your employer can offer you, including:

• 401(k) plan
• 403(b) plan
• 457(b) plan
• Pension plan
• Employee stock ownership plan (ESOP)

Your employer’s business generally determines the type of defined contribution (DC) plan it offers. Of the DC plans—plans you as an employee can contribute savings to—401(k), 403(b), and 457(b) are the most common, and they have a few key differences.

A couple notes on the above:

• The maximum annual plan contribution includes all money contributed to your account by both you and your employer. If you’re a participant in a 401(k) or 403(b) plan, are under 50 years old, and contribute the maximum of $23,000, your employer can still contribute an additional $46,000 for a total of $69,000. If you’re a participant in a 457(b) plan, however, under 50 years old (or the catch-up provision doesn’t apply to the plan) and you contribute the maximum of $23,000, then the maximum plan limit has been reached and the employer can't contribute. Alternatively, in this case, if you contributed $19,500, your employer could still contribute an additional $3,500 for a total of $23,000.
• Both 403(b) and 457(b) plans may allow you to save additional amounts—special contributions—above those listed if you meet specific criteria. In some instances, this can double the amount you’re able to save.

Is a 403(b) better than a 401(k) or 457(b)?

No plan type is better than the others, they’re just different. 403(b) plans are available for schools, churches, and nonprofits, while 457(b) plans are more geared toward government and municipal employees (but may be offered by tax-exempt organizations for a select group of highly compensated or management employees), and 401(k)s are generally offered by for-profit businesses. They all allow you to save the same amount of money from your paycheck for the year, although 403(b)s and 401(k)s allow for higher contributions from the employer. 403(b)s and 457(b)s allow you to make special contributions to increase your retirement savings, but they have different eligibility criteria—you must have 15 years of service for 403(b) plans and be within three years of normal retirement age for 457(b) plans.

Can you contribute to a 401(k), 403(b), and 457(b) at the same time?

Yes, if you happen to have more than one job with access to a retirement plan—it’s not likely one employer would be able to offer more than one of these types of plans. But if you do have access to more than one, you can participate in them, provided you satisfy the plan’s eligibility requirements. And depending on which combination of plans you participate in, you may be able to save the maximum amount in each plan without one offsetting the other.

If one of the plans you participate in is a 457(b), then you can save the maximum amount in both the 457(b) and the other plan. If you participate in a 401(k) and a 403(b), then you can only save $23,000 total between the two. If you contributed $10,000 to your 401(k), you'd be limited to saving $13,000 in your 403(b). 

How do you manage all your retirement accounts?

What’s the best way to manage your retirement plan accounts from current and former employers? It’s up to you, but you don’t have to do anything—you can leave each account where it is (unless the plan automatically cashes you out). Keep good records and stay organized if you take this approach.

You may also be able to consolidate your accounts from previous employers to simplify the oversight of your investments by moving your old accounts into the retirement plan you currently participate in or into an individual retirement account (IRA) that isn’t associated with your employer. But you need to check with your current employer if you wanted to move money into your current employer-sponsored plan, as rollovers are subject to certain rollover rules and the provisions of your employer’s retirement plan.²

As you change jobs throughout your career, don’t get too hung up on the type of retirement plan you’re offered. Saving for retirement—regardless of the plan type—is most important. But as you move from one role to the next, think about how you’ll continue to manage and oversee your former retirement accounts. Know what your options are if you decide to leave your employer. Overseeing a dozen retirement accounts after as many jobs may be a burden you want to lessen, but you don't have to.