Open to public educational employers and private not-for-profit 501(c)(3) organizations. Funded by the employee through elective, tax-deferred contributions and by the employer on a basic, matching or discretionary basis. Employee and employer contributions are tax deferred, but total contributions are limited. Income tax is due upon withdrawal and a 10% federal penalty may apply to early withdrawals.
Roth accounts can be added to a 403(b) plan that allows employees to make after-tax contributions in which earnings will not be taxed if received as a "qualified distribution."