Title: 401k vs 403b: What's the Difference?

Not only is paying loans down a primary goal post-medical school graduation, but also beginning to plan for your future retirement.

One question that frequently comes up when beginning residency, or beginning a new attending job, is regarding something called a 403b. Many of us may have heard of an employer sponsored play called a 401k, but what is a 403b?

For the majority of people, the two plans are relatively synonymous. But to break it down as simply as possible, we have compared the two below, side by side. Although both are very similar, and are vehicles to invest for retirement by taking a portion of your paycheck, there are subtle differences, which we explain below:

According to the American Hospital Association, as of 2024 there were 6120 hospitals in the United States, between 70-80% of which are nonprofit. Most likely, your system is a non-for-profit, meaning its more likely you will have a 403b as an investing option. The main difference between 401k and 403b is the eligibility, investing options, and whether the employer will match some of your contributions. Some employers may offer both options and the points in our chart are all good comparisons to ask about and ensure you have clarification on before committing to one plan or the other. As always, seek professional advice from an advisor or financial expert if you are unsure, and know that your strategy can be adjusted as your circumstances change overtime. Also, the numbers and limits above are not permanent and will often change year to year, and circumstantially, such as married joint filing.

For more information, visit https://www.irs.gov/retirement-plans/plan-sponsor/types-of-retirement-plans

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