Section 403(b) plans are permitted to invest in two specific type products/investments — either a (b)(1) annuity, such as a fixed or variable annuity; or a (b)(7) custodial account of a regulated investment company (mutual fund), such as an index fund, stock fund, bond fund, money market fund, etc.

Can I use my 403b to buy stocks?

A 403b plan and an IRA are two different types of retirement accounts. They both offer a way to grow your money tax-deferred. An employer sponsors a 403b plan while an individual needs to open an IRA at a brokerage firm. A brokerage firm allows you to buy and sell securities like mutual funds and stocks.

Does a 403 b count as an investment?

Since most 403(b) plans offer a money market fund as one of the investment options, you could tuck your contribution and your match in there and hold it with relatively little risk compared to the potential fluctuations of mutual funds that invest in stocks and bonds.

What kind of investments can you put in a 403B plan?

Under the rules that govern 403 (b) plans, the only permissible investments are mutual funds and annuities. Participants in 403 (b) plans can invest in stocks indirectly through mutual funds, but cannot invest directly in stocks. 4  How Does the Catch-Up Provision Work? Contribution limits for 403 (b) plans are the same as for 401 (k)s.

Who is allowed to have a 403B account?

Participation in 403 (b) plans is limited to church ministers and certain employees of public school systems, colleges, universities and tax-exempt organizations. Only employers can establish 403 (b) accounts.

What are the advantages and disadvantages of a 403B plan?

403 (b) Plan 1 Understanding a 403 (b) Plan. The features and advantages of a 403 (b) plan are largely similar to those found in a 401 (k) plan. 2 Advantages of a 403 (b) Plan. Earnings and returns on amounts in a regular 403 (b) plan are tax-deferred until they are withdrawn. 3 Disadvantages of a 403 (b) Plan. …

Do you pay taxes when you withdraw from a 403B plan?

Similar to 401(k) plans, 403(b) and 457(b) plans allow you to contribute pre-tax money from your paycheck to your 403(b) or 457(b) plan to invest in certain investment products. These pre-tax contributions and their investment earnings will not be taxed until you withdraw the money, typically after you retire.