Which plan is designed for nonprofit organizations and public school employees and allows salary deductions?

Which plan is designed for nonprofit organizations and public school employees and allows salary deductions?

• A. 403B
• B. IRA
• C. Roth IRA
• D. 401k

Answer: (A)

The plan described is a 403(b) plan. It’s a retirement arrangement specifically for employees of nonprofit organizations, including public schools, and it offers salary deferrals—contributions taken directly from an employee’s paycheck on a pre-tax basis. This setup reduces current taxable income and lets the money grow tax-deferred until withdrawal in retirement. Compared with other options, an IRA or Roth IRA are individual accounts you fund yourself and don’t come from an employer’s payroll system, so they aren’t tied to a nonprofit or public-school setting by design. A 401(k) is typically offered by private-sector employers, whereas the 403(b) is the standard choice for nonprofit and public-school employees.

The plan described is a 403(b) plan. It’s a retirement arrangement specifically for employees of nonprofit organizations, including public schools, and it offers salary deferrals—contributions taken directly from an employee’s paycheck on a pre-tax basis. This setup reduces current taxable income and lets the money grow tax-deferred until withdrawal in retirement.

Compared with other options, an IRA or Roth IRA are individual accounts you fund yourself and don’t come from an employer’s payroll system, so they aren’t tied to a nonprofit or public-school setting by design. A 401(k) is typically offered by private-sector employers, whereas the 403(b) is the standard choice for nonprofit and public-school employees.