Is a 403(b) an IRA?
A 403(b) is not an IRA. Both are retirement accounts with similar tax benefits, but they have different contribution limits, and 403(b)s are offered only through employers.
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When it comes to retirement accounts, there are two main types: the accounts you can open yourself, and the accounts available to you through an employer.
If you work for a nonprofit or public service, such as a hospital or school, you'll likely have access to a 403(b) plan. On the other hand, an individual retirement account (IRA) is available to anyone with earned income. Understanding how a 403(b) plan compares to an IRA can help you decide whether one or a combination of both can help you prepare for retirement.
403(b) vs. IRA
A 403(b) plan is a tax-advantaged retirement savings account offered by nonprofit organizations, public schools, and religious institutions to their employees. It's very similar to a 401(k) plan offered by employers in the private sector.
In contrast to a 403(b), anyone who has income from work — what the IRS calls “taxable compensation” — can open up and contribute to an IRA. If you're a married couple who files jointly, a nonworking spouse can also contribute, thanks to the spousal IRA. Here's a quick preview of how a 403(b) and an IRA compare.
Key differences between an IRA and a 403(b): An overview
Feature | 403(b) plan | IRA |
|---|---|---|
Eligibility | Offered by employers in the nonprofit and public sectors to their employees. | Anyone with earned income can open an IRA. |
Contribution limits | $23,500 for those under age 50 in 2025. Employees over age 50 or have more than 15 years of service can add more into their 403(b). | $7,000 for individuals under age 50 in 2025. Those age 50 and above can add another $1,000 as a catch-up contribution. |
Matching contributions | Often available, but varies by employer. | Typically not available, though some providers may offer a match. |
Investment choices | Limited investment options, typically annuities or mutual funds. | Broad investment options, including stocks, bonds, ETFs and more. |
Tax benefits | Pre-tax or Roth, depending on plan provider. | Traditional or Roth. |
Early withdrawal rules | May incur 10% penalty and income tax for non-qualified withdrawals. | May incur 10% penalty and income tax for non-qualified withdrawals. Roth contributions — not earnings — can come out tax- and penalty-free. |
» MORE: How and where to open an IRA
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403(b) and IRA contribution limits
Another big difference between these two types of retirement accounts is that you can contribute much more money to a 403(b) plan than you can to an IRA.
The annual maximum contribution to a 403(b) is $23,500 in 2025. People age 50 and older can contribute an extra $7,500 as a catch-up contribution. Due to the Secure 2.0 Act, those ages 60, 61, 62 and 63 get a higher catch-up contribution of $11,250, compared with an IRA annual maximum of $7,000 in 2025 ($8,000 if age 50 and older). Employees with 15 or more years of service with their employer may also qualify for as much as $15,000 in total additional contributions to a 403(b) plan.
Keep in mind that the maximum 403(b) contribution is a combined limit: If you also contribute to a 401(k), SIMPLE IRA or some other workplace retirement plan, the annual maximum is for all of those plans combined.
But the 403(b) contribution limit is separate from the limit for a traditional IRA or Roth IRA. That means you're allowed to contribute the maximum to a 403(b) and contribute the maximum to a traditional or Roth IRA in the same year. (Note that Roth IRAs have income limits that restrict who can contribute.)
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How to set up an IRA
You can set up an IRA with an online broker, robo-advisor or bank in just a few minutes. You can find providers that charge no fees to open an IRA, and that require no minimum deposit. You can set up transfers from your bank account and start with as little as $25 or less.
» Ready to get started? See our picks for the best IRA account
