Q&A: What is a 401k/403b?

401k’s and 403b’s are tax-advantaged retirement accounts held by an employer. There are two main types: Traditional and Roth. Many employers offer a matching contribution for their employees, meaning that they contribute an amount of money (usually a percentage of the employee’s paycheck) to each employee who qualifies for it.

The main difference between 401k’s and 403b’s is that 401k’s are usually with for-profit entities (private businesses), while 403b’s are through tax-exempt entities (governments, schools, police/fire departments).

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