All Descriptions

A 401(a) is a retirement savings plan that allows accumulation of tax-advantaged funds for retirement with contributions coming from the employer, the employee or both. Employers may match a fixed percentage of employee contributions or contribute without a required employee contribution. Since this plan type is often used as an incentive, vesting schedules for funds are often associated with it.

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A 403(b) is a retirement savings plan generally offered by public schools and other tax-exempt organizations that allows employees to make contributions on a pretax or post-tax basis. Most plans allow you to start, stop, increase or decrease contributions at any time. The employer determines the investment providers and employees must open an account with one of those providers to contribute. Employers may also make contributions on behalf of employees.

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A 457 is a retirement savings plan that allows employees to make contributions on a pretax basis, thus income taxes are deferred until your assets are withdrawn. Most plans allow you to start, stop, increase or decrease contributions at any time. The contribution limits are separate from those of 401(k) and 403(b) plans allowing additional employee savings. There is also no 10% early withdrawal tax applicable to distributions from a 457(b) plan.

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Some public employers have created FICA Alternative plans to provide all employees the opportunity to have retirement savings and to lessen the employer's Social Security tax burden. Participating employees are not subject to Social Security taxes while covered by this plan. Contributions to this plan are made on a pretax basis.

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The Texas Optional Retirement Program (ORP) is a 403(b) defined contribution retirement plan funded by mandatory employee deferrals, a State contribution and an optional local college or university contribution. Full-time faculty, librarians, and certain administrators and professionals of a Texas public institution of higher education may make a one-time irrevocable election at employment to participate in the ORP instead of the Teacher Retirement System of Texas (TRS) defined benefit pension plan. Each participant selects from a variety of investments offered by several companies (authorized by the employing institution) through annuity contracts or mutual fund investments. Because participants manage their own personal investment accounts, ORP entails more individual risk and responsibility than that associated with TRS membership.

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