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Retirement Plans For Nonprofits In Phoenix
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Multi-State
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Phoenix
Control #:
US-001HB
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FAQ
403(b) 403(b) plans are similar to 401(k)s in the respect that they are both qualified tax-advantaged retirement vehicles offered by employers. However, 403(b) plans differ in that they are only available to certain government employees (schools and hospitals) and non-profit organizations.
Many people have a misconception that nonprofits don't provide their employees benefits and instead rely on volunteers. This isn't the case for many nonprofits. Nonprofit employers offer benefits to their employees much like any business would.
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.
Popular choices include 403(b) plans, similar to 401(k) plans but tailored for nonprofit organizations, and 401(a) plans, which offer higher contribution limits. Additionally, SIMPLE IRAs and SEP IRAs cater to smaller nonprofits with simpler administrative requirements.
Though 401(k)s are primarily offered by larger for-profit companies, many nonprofit entities also offer 401(k) plans to their employees. In fact, many nonprofit organizations may choose to offer both a 401(k) and a 403(b).
Nonprofits have a wide array of retirement plan options to support their employees' financial futures, from 403(b) and 457(b) plans to SEP IRAs and SIMPLE IRAs. These plans offer various benefits, from pre-tax savings and employer contributions to simplified administration tailored for smaller organizations.
A 403(b) plan is available to non-governmental non-profit entities. This plan type is exempt from certain compliance testing and has fewer investment options than a 401(k).
Pros and cons of a 403(b) ProsCons Tax advantages Few investment choices High contribution limits High fees Employer matching Penalties on early withdrawals Shorter vesting schedules Not always subject to ERISA1 more row •
In order for a non-profit company to use a SIMPLE IRA, it must have less than 100 employees. The IRS does not categorize SIMPLE IRA plans as qualified plans. Since it was designed for start-ups and small organizations, a non-profit would not have to worry about: Non-discrimination testing.