For contribution-limit purposes, 403(b) and 401(k) plans are very similar in 2026, but important differences remain in eligibility, plan design, investments, ERISA coverage, and certain catch-up rules. The comparison chart below shows it: the same $24,500 employee deferral limit (what you put in from your own pay), the same catch-ups, the same $72,000 combined ceiling, the same tax treatment.¹ Nor do you choose between them. Your employer decides which you are offered, and one employer can run both; Mayo Clinic, for example, publishes summary plan descriptions for a 403(b) and a parallel 401(k).¹⁵ ¹⁶
Note: The views in this blog are the views of Fortress Financial Group and not the views of Mayo Clinic. Mayo Clinic and Fortress Financial Group are not affiliated.
The differences that matter are the investment menu, an additional catch-up a 403(b) may offer, and the protections that apply when something goes wrong.
403(b) vs. 401(k) at a Glance: The 2026 Comparison Chart
Feature | 401(k) | 403(b) |
|---|---|---|
Eligibility: who can offer it | For-profit employers; nonprofits may also sponsor one | Public schools and colleges, 501(c)(3) nonprofits including nonprofit and public hospitals, churches¹⁷ |
2026 employee deferral limit | $24,500 | $24,500 |
Catch-up at 50 and older | $8,000, total $32,500 | Same |
Catch-up at 60 through 63 | $11,250, total $35,750, if the plan adopted it | Same |
Employee plus employer limit, 2026 | $72,000, or 100% of pay if less, plus any catch-up | Same |
Pay counted, 2026 | First $360,000 | Same |
Roth deferrals | Permitted if the plan offers it | Same |
Mandatory Roth catch-up | Generally from 2026 if 2025 Social Security wages from that employer topped $150,000 | Same wage test; special transition rules can apply to multiemployer plans¹¹ |
15-year service catch-up | Not available | Up to $3,000 a year at qualifying employers, if the plan adopted it |
Investment menu | May include mutual funds, collective investment trusts and a brokerage window, depending on the plan | Commonly annuity contracts and mutual funds; check the actual menu and any brokerage-window restrictions¹⁷ |
Plan loans and hardship withdrawals | If the plan permits; loans generally capped at the lesser of $50,000 or half the vested balance¹⁸ | Same caps; in an annuity-based plan, ask whether the insurer or the plan handles the loan |
Testing on your deferrals | Annual nondiscrimination test unless safe harbor; highly paid employees can have deferrals refunded | None on deferrals; every eligible employee must be allowed to defer¹⁷ |
ERISA (federal pension law) coverage | Almost always | Nonprofits that contribute: generally covered. Public schools, public hospitals, non-electing church plans: generally not⁹ ¹⁰ |
The 2026 indexed figures in this 401(k) vs 403(b) comparison chart come from IRS Notice 2025-67.¹ The 15-year amounts ($3,000 a year, a $15,000 lifetime total, and a $5,000-per-year-of-service test explained below) are statutory and have never been indexed.⁵ ⁶ Catch-ups sit on top of the $72,000 limit, so the all-in 2026 maximum is $80,000 at 50 and older and $83,250 at 60 through 63.⁷ The $11,250 is a four-year window: at 64 you drop back to $8,000.¹
That $24,500 is a limit on you, not on each plan:¹ ² a 401(k) at one job and a 403(b) at another share one $24,500, and neither payroll office is watching the other.³ It catches moonlighting clinicians, mid-year job changers, and anyone who kept deferring at the old percentage after starting somewhere new. If you go over, the excess is income in the year you deferred it either way, and the fix runs through the plan: ask one plan to return the excess plus earnings by April 15 of the following year, or earlier if the plan requires notice sooner. The law fixes that date, so a filing extension does not move it, and missing it means the money is taxed a second time on the way out.⁴ A 457(b) is the one genuine exception: its $24,500 is a separate limit, so an eligible employee can fund a 403(b) and a 457(b) in full in the same year.³ Whether it is governmental or not changes the catch-ups, the rollovers and who owns the balance; our 403(b) and 457(b) coordination checklist for physicians (https://fortressfg.net/blog/403b-and-457b-a-retirement-coordination-checklist-for-physicians) covers that.
Where the 403(b) vs. 401(k) Differences Are Real
The investment menu. A 403(b) may offer annuity contracts, mutual funds, or both.¹⁷ The useful comparison is between the options your plans actually offer: their expenses, withdrawal restrictions, and any brokerage-window limits. An annuity can carry a surrender charge for leaving the contract early. Read that schedule before moving a large balance into one.
The 15-year service catch-up. The one contribution feature a 401(k) cannot have. Under Code Section 402(g)(7), an employee with 15 or more years at one qualified organization (an educational organization such as a school or college, a hospital, a home health service agency, a health and welfare service agency, or a church) may defer above the standard limit by the least of:⁵ ⁶
- $3,000 for the year;
- $15,000 over a lifetime, reduced by prior use; or
- $5,000 times years of service with that employer, minus the elective deferrals that employer has made for you in earlier years.
The third test decides it for most people: if your deferrals there have averaged more than $5,000 a year, the catch-up is zero. It mainly helps people who deferred little for many years. Where it applies, deferrals above the standard limit count first against the 15-year catch-up and only then against the age catch-up,² drawing down the $15,000 lifetime cap whether or not you meant to use it. The ceilings are $27,500 on the 15-year rule alone,⁶ $35,500 with the age-50 catch-up and $38,750 with the 60 through 63 catch-up. It is plan-optional; a summary plan description that lists only the age-based catch-ups usually means the plan does not offer it, so ask the administrator in writing before you count on it.
Testing on your own deferrals. A 401(k) must pass an annual nondiscrimination test on employee deferrals unless it uses a safe harbor design; when it fails, highly paid employees get part of their deferrals refunded as taxable income. A 403(b) skips that test and must instead let every eligible employee defer, the universal availability rule.¹⁷
ERISA coverage. The Employee Retirement Income Security Act gives a plan a written document, a summary plan description, an annual Form 5500 filing, and fiduciary duties enforceable in court. Nearly every 401(k) is covered. A 403(b) depends on its sponsor.
ERISA's Title I does not reach governmental plans or non-electing church plans,⁹ and a Labor Department safe harbor can keep a voluntary private-employer 403(b) arrangement outside ERISA if the employer contributes nothing and limits its involvement.¹⁰ An employer match rules out that safe harbor, but it does not change the governmental or church-plan exemptions. Mayo's 403(b) summary plan description carries a statement of ERISA rights.¹⁵ For a plan outside ERISA, ask what fee disclosures are available and who selects and monitors the investment options.
The Mandatory Roth Catch-Up in 2026: Who It Applies To
This is the first year the rule applies, and it treats 403(b) and 401(k) plans alike. If your prior-year wages from the employer sponsoring the plan exceeded $150,000, your catch-up contributions this year must be Roth. For 2026 that means 2025 wages, tested against $150,000, up from $145,000.¹
Which wages. Generally Social Security wages, Box 3 of your Form W-2, from the employer sponsoring the plan. For the 2026 transition, a plan's good-faith interpretation may instead use Medicare wages, so confirm its method.¹¹ It is not a household-income test.
Whose wages, at which employer. The test is per employer, not across unrelated employers. A couple earning $240,000 between them at $120,000 each is not caught. Starting with an unrelated employer this year can put you outside the rule because it looks at the preceding year's wages from that employer.
Which year it starts. Generally 2026. The IRS transition relief in Notice 2023-62 expired on December 31, 2025. The final regulations generally apply from 2027, so for 2026 plans follow a reasonable, good-faith reading of the statute; special transition rules apply to certain multiemployer plans.¹¹ ¹² Confirm your plan's implementation date with its administrator.
A plan with no Roth feature. If a plan lets anyone the rule reaches make Roth catch-ups, it must let every catch-up-eligible participant make them.¹¹ A plan with no Roth feature cannot, so under the final regulations a participant the rule reaches has a catch-up limit of $0 there, while participants under the wage line keep making pre-tax catch-ups.¹¹ As a hypothetical: in a plan with no Roth feature, a 55-year-old whose 2025 wages there were $160,000 loses the whole $8,000 catch-up until the sponsor adds one; a colleague at $120,000 keeps it.
For most people caught by it, the same dollars go in; what changes is that the catch-up portion is no longer pre-tax. Ask how your plan handles the switch. Mayo's plans, for example, say a pre-tax election on file stays put and the catch-up portion switches to Roth automatically.¹⁵ ¹⁶
Is a 403(b) Better Than a 401(k)? The Four Things That Decide It
Structurally, neither. Four things separate a good retirement account from a mediocre one, and the plan type is not on the list. The figures that follow are hypothetical illustrations, not results.
Capturing the full match. Employer matching contributions are an important factor to consider when choosing a deferral rate. Take a plan matching 50% of deferrals on the first 4% of pay. An employee earning $120,000 who defers 4% gets $2,400 of employer money; deferring 2% gets $1,200, and no plan structure recovers the difference. A subtler version sits higher up: front-load, hit $24,500 in the spring, and later paychecks may earn no match unless the plan runs a year-end true-up (a catch-up match on the paychecks that missed it).
Your deferral rate. An automatic-enrollment default may be lower than the contribution rate appropriate for an individual's retirement goals, so participants should not assume the default rate is sufficient for them. For that same earner, 4% is $4,800 a year and 12% is $14,400 against a 2026 limit of $24,500. Roughly $19,700 sits between a low default and the ceiling, which dwarfs any plan-type difference.
What the funds cost. You do not pick the menu, but you pick what you use from it. Half a percentage point of expense on a $400,000 balance is $2,000 a year, taken before you see a return. Inside one plan, the cheapest and most expensive options usually sit further apart than the plan types do.
Vesting, and staying invested. Your own deferrals are always 100% vested. Employer money follows the vesting schedule, and under a three-year cliff, leaving at two years and eleven months forfeits all of it. The rest is behavioral: what interrupts compounding is a move to cash after a bad quarter, or a cash-out at a job change.
What Happens to a 403(b) or 401(k) When You Leave a Job
Participants generally have four broad options with either plan type, subject to the terms of the applicable plan. The one we see chosen by reflex is the IRA rollover, usually before anyone has priced the plan's funds or checked the age-55 exception.
- Leave it in the plan. Large plans often have institutional pricing you cannot get retail; you cannot add new money, and a small balance may be rolled out automatically.
- Roll it to an IRA. You gain a broader investment range and one consolidated account. You give up the plan's pricing and, if you left that employer in or after the year you turned 55, the plan-only exception that allows withdrawals before 59½ without the 10% additional tax.¹³
- Roll it into the new employer's plan. A 401(k) balance can move into a 403(b) and a 403(b) into a 401(k); the letters do not block it, only the receiving plan's rules do.¹⁴ It leaves one account and one beneficiary form.
- Cash it out. Ordinary income, generally a 10% additional tax before 59½ unless an exception applies,¹³ and 20% mandatory federal withholding when the check is made out to you.¹⁴
A non-governmental 457(b) is not on that list: it pays out on the schedule the plan sets and cannot be rolled to an IRA, a 401(k) or a 403(b),⁸ so review it with your tax professional before setting a separation date. Money that does reach an IRA is easiest to reposition in the years between retirement and required distributions, the subject of our piece on the Roth conversion window (https://fortressfg.net/blog/roth-conversion-window).
When the Plan Type Does Matter: Four Situations
For most people it does not; even a tie between job offers comes down to the match formula and the vesting schedule, not the letter. Four situations deserve a closer look:
- An annuity-based 403(b) about to receive a large balance.
- Fifteen or more years at one hospital, school or church, with no written answer yet on the 15-year catch-up.
- A plan with no Roth feature, if your wages there are near or above $150,000.
- Two employers' plans funded in the same year.
Sometimes one employer runs both. At Mayo Clinic, the plan that covers you follows your employing entity, not an election. The January 2026 summary plan descriptions include employer lists dated January 2021: the 401(k) list names Rochester Airport Company and Franklin Heating Station; the 403(b) list includes Mayo Clinic, Mayo Clinic Hospital Rochester, Mayo Clinic Arizona, Mayo Clinic Health System entities and others. Confirm your current plan through HR Connect.¹⁵ ¹⁶ Both descriptions set the same loan terms (50% of the vested balance, $1,000 minimum, $50,000 maximum, one loan at a time) and limit hardship withdrawals to three a year from 2026.¹⁵ ¹⁶ The 403(b) description lists only the age-based catch-ups, so do not count on a 15-year catch-up without confirmation.¹⁵ Our guide to the Mayo 403(b) Plan (https://fortressfg.net/blog/mayo-403b-plan-a-simple-guide) covers that plan on its own; the Mayo Clinic pension guide (https://fortressfg.net/blog/mayo-clinic-pension-a-simple-guide) covers the pension beside it.
Frequently Asked Questions
Is a 403(b) better than a 401(k)?
Neither is better by design. In 2026 they share the same $24,500 deferral limit, the same catch-ups, the same $72,000 combined ceiling and the same tax treatment, and your employer decides which is offered.¹ What separates a strong plan from a weak one is the match formula, the vesting schedule, the cost of the funds and, in a 403(b), whether the menu is built on annuity contracts.
Can I contribute to a 403(b) and a 401(k) in the same year?
Yes, but one shared limit covers both. The 2026 elective deferral limit of $24,500 aggregates across every 401(k) and 403(b) you participate in, including plans at different employers.³ Neither payroll system sees the other, so tracking the combined total is on you. If you go over, ask one plan to return the excess plus earnings by April 15 of the following year, or the money is taxed twice.⁴
What is the 2026 403(b) contribution limit?
The 2026 403(b) contribution limit is $24,500, identical to the 401(k) limit, per IRS Notice 2025-67.¹ Add $8,000 at age 50 or older, for $32,500, or $11,250 for anyone who turns 60 through 63 that year if the plan adopted that catch-up, for $35,750. Employer money does not count toward the $24,500; it counts toward the $72,000 cap (or 100% of pay if less), with catch-ups on top.
Does the mandatory Roth catch-up rule apply to me in 2026?
It generally applies if your 2025 Social Security wages in Box 3 of your W-2 from the employer sponsoring the plan exceeded $150,000.¹ ¹¹ The test is per employer, not household income: a couple earning $240,000 combined at $120,000 each is not caught. Special transition rules can apply to multiemployer plans, so confirm your plan's implementation date with its administrator.
What is the 403(b) 15-year service catch-up, and who qualifies?
It lets an employee with 15 or more years at one hospital, school, college or church defer above the standard limit, if the 403(b) plan offers it. The 2026 amount is the least of $3,000, $15,000 over a lifetime reduced by prior use, or $5,000 times years of service with that employer minus your prior deferrals there.⁵ ⁶ It rarely helps anyone who has averaged more than $5,000 a year of deferrals there.
Key Takeaways
- A 403(b) is not simply a weaker version of a 401(k). The two plan types share many of the same contribution limits and tax features, but important differences can exist in plan design, investment options, ERISA protections, and catch-up provisions. For many participants, factors such as the employer match, contribution rate, investment costs, and vesting schedule may have a greater practical impact on retirement savings than the plan type itself.
- The 2026 employee deferral limit is $24,500 for both, plus $8,000 at age 50 and older or $11,250 at ages 60 through 63 if the plan adopted it.¹
- That $24,500 is per person, not per plan: a 403(b) and a 401(k) at different employers share one limit, and an excess must come back out by April 15 or it is taxed twice.³ ⁴
- Only a 403(b) may offer the 15-year service catch-up: up to $3,000 a year against a $15,000 lifetime cap, lifting the 2026 ceiling to $35,500 with the age-50 catch-up for the minority who qualify.⁵ ⁶
- Catch-ups must be Roth for 2026 if your 2025 Social Security wages from that employer exceeded $150,000; in a plan with no Roth feature, participants over the threshold get no catch-up while those under it keep theirs.¹ ¹¹
If you are weighing whether an old 401(k) should stay put, move into your current plan or go to an IRA, or whether two plans in one year put you over $24,500, it is worth checking before December. Fortress Financial Group is a fee-only fiduciary advisory firm with offices in Rochester, Minnesota and Scottsdale, Arizona. We do not prepare tax returns, draft legal documents, or sell insurance; we build the plan and coordinate with your CPA and attorney when you authorize it. We are glad to talk it through in a 30-minute introductory call (https://fortressfg.net/contact-us) by phone, at no cost or obligation and with no documents required. Or start on your own with the Retirement Scorecard (https://fortressfg.net/retirement-scorecard).
References
1. Internal Revenue Service, Notice 2025-67, 2026 retirement plan and IRA limits. https://www.irs.gov/pub/irs-drop/n-25-67.pdf
2. Internal Revenue Service, Retirement Topics: 403(b) Contribution Limits. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-403b-contribution-limits
3. Internal Revenue Service, How Much Salary Can You Defer If You're Eligible for More Than One Retirement Plan? Cited for the rules only; its dollar figures are not current. https://www.irs.gov/retirement-plans/how-much-salary-can-you-defer-if-youre-eligible-for-more-than-one-retirement-plan
4. Internal Revenue Code section 402(g)(2)(A) (at reference 5) and Internal Revenue Service, Retirement Topics: What Happens When an Employee Has Elective Deferrals in Excess of the Limits. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-what-happens-when-an-employee-has-elective-deferrals-in-excess-of-the-limits
5. Internal Revenue Code section 402(g)(7), the 15-years-of-service catch-up. https://www.law.cornell.edu/uscode/text/26/402
6. Internal Revenue Service, Publication 571, Tax-Sheltered Annuity Plans (403(b) Plans), revised January 2026. https://www.irs.gov/pub/irs-pdf/p571.pdf
7. Internal Revenue Code section 414(v)(3)(A) (https://www.law.cornell.edu/uscode/text/26/414) and Internal Revenue Service, Issue Snapshot: 401(k) Plan Catch-Up Contribution Eligibility. https://www.irs.gov/retirement-plans/issue-snapshot-401k-plan-catch-up-contribution-eligibility
8. Internal Revenue Service, Comparison of Tax-Exempt 457(b) Plans and Governmental 457(b) Plans. Cited for structural rules only; its dollar figures are not current. https://www.irs.gov/retirement-plans/comparison-of-tax-exempt-457b-plans-and-governmental-457b-plans
9. Employee Retirement Income Security Act section 4(b), 29 U.S.C. 1003(b). https://www.law.cornell.edu/uscode/text/29/1003
10. 29 CFR 2510.3-2(f), the Department of Labor safe harbor for certain voluntary 403(b) arrangements. https://www.ecfr.gov/current/title-29/section-2510.3-2
11. Treasury Decision 10033, final catch-up contribution regulations, 90 Federal Register 44527 (September 16, 2025), 26 CFR 1.414(v)-2. https://www.federalregister.gov/documents/2025/09/16/2025-17865/catch-up-contributions
12. Internal Revenue Service, IR-2025-91, final regulations on the Roth catch-up rule and other SECURE 2.0 provisions. https://www.irs.gov/newsroom/treasury-irs-issue-final-regulations-on-new-roth-catch-up-rule-other-secure-20-act-provisions
13. Internal Revenue Service, Retirement Topics: Exceptions to Tax on Early Distributions. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions
14. Internal Revenue Service, Rollovers of Retirement Plan and IRA Distributions. https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions
15. Mayo Clinic, Mayo 403(b) Plan Summary Plan Description, January 2026, MC5500-86. https://mcforms.mayo.edu/mc5500-mc5599/mc5500-86.pdf
16. Mayo Clinic, Mayo Retirement Savings 401(k) Plan Summary Plan Description, January 2026, MC5500-85. https://mcforms.mayo.edu/mc5500-mc5599/mc5500-85.pdf
17. Internal Revenue Code section 403(b) (eligible employers, permitted investments, universal availability; the securities-law change needed for collective investment trusts had not been enacted as of September 2026) and section 401(k)(3). https://www.law.cornell.edu/uscode/text/26/403 and https://www.law.cornell.edu/uscode/text/26/401
18. Internal Revenue Service, Retirement Topics: Loans. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-loans
Disclosures
This article is for educational purposes only and does not constitute personalized investment, tax, legal, or financial advice. The information provided is general in nature and may not apply to your specific situation. Please consult with a qualified financial advisor, tax professional, or attorney about your individual circumstances before making any financial decisions.
Fortress Financial Group is a Registered Investment Adviser. Registration does not imply a certain level of skill or training. Fortress Financial Group operates as a fee-only fiduciary.
Tax content. Tax laws and regulations change frequently. The information in this article reflects rules in effect as of September 2026 and may not reflect subsequent changes. Tax outcomes depend on your specific situation. Consult a qualified tax professional before making decisions based on tax considerations.
Employer plan content. Plan provisions, including contribution features, loans, vesting, and distribution options, are set by each employer's plan document and can change. Your summary plan description and your employer's benefits department are the authority on your specific plan.
Mayo Clinic benefits content. This article describes Mayo Clinic retirement benefits as we understand them based on publicly available information and our experience working with Mayo Clinic employees and retirees. Plan provisions can change, and your specific benefits depend on your hire date, employment classification, and other factors. Consult Mayo Clinic Human Resources, your plan documents, or a qualified advisor for guidance specific to your situation. The views in this blog are the views of Fortress Financial Group and not the views of Mayo Clinic. Mayo Clinic and Fortress Financial Group are not affiliated.
