403(b) plans are only available for employees of certain non-profit tax-exempt organizations: 501c(3) Corps, including colleges, universities, schools, hospitals, etc. If you are an employee of one of these organizations, a 403(b) can be one of your best tools for creating a secure retirement. It provides you with two important advantages. First, all contributions and earnings to your 403(b) are tax-deferred. You only pay taxes on contributions and earnings when the money is withdrawn. Second, many employers provide additional contributions to your 403(b). The combined result is a retirement savings plan you cannot afford to pass up.
Withdrawals are taxed as ordinary income in the year received. Tax penalties and penalties for early withdrawal may apply if funds are withdrawn prior to age 59-1/2.