A 403(b) plan is a retirement savings account that works kind of like a 401k but is designed mainly for teachers, hospital workers, church staff, and other people working in the non-profit or public sector. So, when someone asks “what is a 403 b plan?” the short answer is: it’s a tax-friendly way for employees in these fields to put money aside for their retirement.
With a 403(b), employees can contribute part of their paycheck before taxes. Some employers may also chip in by matching contributions, though not always. Just like a 401k Contribution, these deductions will show up clearly on your pay stub.
How a 403(b) Plan Works
- Employee Contributions – Workers decide how much of their paycheck to set aside.
- Employer Contributions – Some non-profits or schools will match, but not all.
- Tax Benefits – Contributions are pre-tax, meaning you reduce taxable income now but pay taxes later when withdrawing.
- Withdrawals – Taking out money early (before age 59½) often comes with penalties.
This is no different than making sure payroll deductions, Regular Hours, or even Accrued Leave are tracked correctly on your pay stub.
403(b) vs Other Retirement Accounts
Here’s a quick look at how 403(b) compares to other retirement savings options:
| 403(b) Plan | 401k | Roth IRA | 401a Plan |
| For schools, hospitals & non-profits | For private companies | After-tax contributions, tax-free withdrawals | For public-sector/government workers |
| Employers may match, not always | Employers usually match | No employer contribution | Employer-driven, less flexible |
| Limited investment choices | Wide investment options | Individual control | Contributions usually mandatory |
| Contribution limits set by IRS | Same limits as 403(b) | Lower contribution limits | Contribution rules vary |
Real-Life Example: Teacher Retirement Savings
Let’s say Jane is a teacher earning $50,000 a year. She decides to put 7% of her salary ($3,500) into her 403(b) plan. Her school district also adds another 3% ($1,500).
On her pay stub, Jane will see:
- Regular Hours worked
- Any Accrued Leave balance
- Her 403(b) deduction, right next to other payroll items like health insurance
StubBuilder makes this super simple to display.
Why 403(b) Plans Matter for Payroll
Payroll managers need to show 403(b) contributions correctly on employee pay stubs. It’s just like handling Federal Holidays 2025 or Federal Holidays 2026 hours, or tracking payments for a contractor using a 1099 NEC Form or 1099 MISC Form.
Accuracy is everything—otherwise it can mess up taxes and compliance. Sometimes, HR teams may even need supporting IRS paperwork like a 147c Letter to verify information.
Key Takeaways
- A 403(b) plan is a retirement account for employees in non-profits, schools, and similar organizations.
- Contributions lower taxable income today but will be taxed when withdrawn.
- Employers might match contributions, though less common than a 401k.
- Shows up as a deduction on your pay stub—just like a 401k Contribution or time-off balances.
FAQs About 403(b) Plans
- Who can enroll in a 403(b) plan?
Mostly employees of schools, hospitals, churches, and other non-profits. - Can I have both a 403(b) and a Roth IRA?
Yes, many people use both. A Roth IRA grows tax-free, while a 403(b) lowers taxable income today. - Do employers always match contributions?
Not always. Some organizations do, some don’t—it depends on your employer. - What happens if I withdraw early?
You’ll usually face income tax and an early withdrawal penalty. The IRS (see retirement plans page) explains exceptions. - How does this show on a pay stub?
It will be listed as a retirement deduction, alongside Regular Hours and other payroll details. - Is it related to hiring or HR checks?
Not directly. But HR may manage both retirement benefits and processes like Social Media Background Screening during onboarding.
Planning for retirement with a 403(b) plan is only part of the picture. Employees also need clear and accurate pay stubs that show contributions, hours, and deductions. That’s where StubBuilder can help. With our easy-to-use paycheck stub generator, you can create professional pay stubs in minutes, making sure retirement deductions like 403(b), Regular Hours, or even Accrued Leave are always displayed correctly.
