Compensation Glossary

Section 403(B) Plan

This is a type of retirement plan, typically established by certain tax-exempt organizations (i.e., charities, churches and hospitals). Section 403(b) plans are a creation of congress to serve as incentive to tax-exempt organizations, which ordinarily would not benefit from the tax advantages of qualified pension plans. The section 403(b) plan enables such organizations to offer their employees retirement compensation, albeit in a slightly different form. Educational organizations may also set up section 403(b) plans. May also be referred to as a tax-deferred annuity (TDA) plan or a tax-sheltered annuity (TSA) plan.