What's the difference between a 401(k), 403(b), and TSP?

401(k)s, 403(b)s, and TSPs are all distinct company-sponsored retirement accounts, which means employees have access to these accounts while they are employed full-time for a single employer. They were created by the U.S. government to encourage Americans to save for retirement, even when it is decades away.

What are 401(k)s?

401(k)s are company-sponsored retirement accounts for for-profit companies. They are used at both private and public companies and are the most common company-sponsored retirement accounts.

401(k)s come in two forms: Traditional and Roth. Traditional 401(k)s allow employees to contribute pre-tax money, which will be taxed when they withdraw from their 401(k), usually during retirement. Roth 401(k)s are post-tax, which means the money employees contribute to their 401(k)s have already accounted for taxes and will not have to pay taxes on their withdrawals if they wait until they are at least 59 1/2 years old.

What are 403(b)s?

403(b)s are essentially the same as 401(k)s, except they are offered by nonprofit organizations. The difference in the name reflects the different tax code they abide by.

What are TSPs?

A Thrift Savings Plan, or TSP, is a type of retirement investment account reserved for federal employees and members of the uniformed service. TSPs offer employees six funds in which to invest.

For more information on what you need to apply for Lendtable's 401(k)+ service, click here.