Retirement Topics - Who Can Participate in a 403(b) Plan?

The following employees are eligible to participate in a 403(b) plan:

• Employees of tax-exempt organizations established under IRC Section 501(c)(3).
• Employees of public school systems who are involved in the day-to-day operations of a school.
• Employees of cooperative hospital service organizations.
• Civilian faculty and staff of the Uniformed Services University of the Health Sciences (USUHS).
• Employees of public school systems organized by Indian tribal governments.
• Certain ministers if they are:
  • Ministers employed by Section 501(c)(3) organizations.
  • Self-employed ministers. A self-employed minister is treated as employed by a tax-exempt organization that is a qualified employer.
  • Ministers (chaplains) who meet both of the following requirements.
    • They are employed by organizations that are not Section 501(c)(3) organizations.
    • They function as ministers in their day-to-day professional responsibilities with their employers.

Universal availability rule

The "universal availability rule" means that if an employer permits one employee to defer salary into a 403(b) plan, the employer must extend this offer to all employees of the organization. See 403(b) Universal Availability video.

The employer may exclude certain employees from the plan:

• Employees who will contribute $200 or less annually
• Those employees who participate in a 401(k) or 457(b) plan or in another 403(b) plan of the employer
• Nonresident aliens
• Employees who normally work less than 20 hours per week
• Students performing services described in IRC Section 3121(b)(10)

Additional resources

• Contribution limits for 403(b) plans
• Saving for Retirement - contributions, taking withdrawals and loans, automatic enrollment
• 403(b) plans home page
• Video: Retirement Plans and the Misclassification of Workers.
• Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of Public Schools and Certain Tax-Exempt Organizations (PDF version)