What characterizes the contribution structure of a 403(b) plan?

A 403(b) plan is characterized by its flexibility in contribution structures, allowing employees to make voluntary contributions on an elective basis. Participants in a 403(b) plan can choose how much to contribute from their salary, which can be directed into various investment options within the plan. This elective contribution feature is a key aspect that distinguishes it from some other retirement plans, where contributions may be less flexible or have mandatory employer participation.

In addition to employee elective deferrals, employers may also choose to make contributions; however, these are not mandated. The ability for employees to contribute on their own initiative is fundamental to the operation of a 403(b) plan, making it accessible for a wide range of employees, particularly those in the education and non-profit sectors.

Contribution structures that involve mandatory employer contributions or restrict employee contributions are not typical of 403(b) plans. Such requirements would limit the flexibility and personal choice that these plans offer to employees.