Which plan is specifically designed for employees of public educational systems?

The Section 403(b) plan is specifically designed for employees of public educational systems as well as certain non-profit organizations. This type of retirement plan allows eligible employees, including teachers and faculty, to contribute a portion of their salary on a tax-deferred basis. Contributions can be made through salary reduction agreements, and there are often options for employer contributions as well. This plan reflects the unique employment context and needs of educators and is tailored to serve those working within the public educational framework.

In contrast, the Section 401(k) plan is typically associated with private sector employees, while the Roth IRA is a type of individual retirement account that offers post-tax income benefits. The Section 457 plan, although it is also available to certain public sector employees, is more focused on governmental employees and is generally not exclusive to educators. Therefore, the 403(b) plan stands out as the specific retirement savings option aligned with the objectives and workforce of public educational institutions.