The investment options available in 403 (b) plans are somewhat more limited than other tax-advantaged retirement plans. You can usually choose between mutual funds and annuities. Unlike 401 (k), you generally cannot invest individual stocks, exchange-traded funds (ETFs), or real estate investment trusts (REITs). Therefore, it seems that most exchange-traded funds can be offered in 403 (b) plans.
However, in practice, ETFs rarely appear in 403 (b), s today. The reason for this is that unlike traditional mutual funds, ETFs are not valued daily, but are valued continuously throughout the day, which creates problems with standard retirement plan record-keeping platforms, which were designed for daily value investments. The 403 (b) retirement plan, which is defined and regulated by the Internal Revenue Service tax code, is a tax-protected annuity plan. The IRS regulates the contributions, distributions, and the type of investments allowed for 403 (b) retirement plans.
Similar to the more popular 401 (k) retirement plans used by for-profit employers, 403 (b) plans are intended for employees of nonprofit employers. While 403 (b) account holders have many of the advantages common to other tax-advantaged retirement plans, such as in-service loans and withdrawals, 403 (b) offers fewer investment options. Like all retirement plans, 403 (b) plans offer tax advantages that allow you to save on taxes now and, in some cases, later, if your plan offers a Roth option.
