Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

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403(b) plans are used by _____-profit employers.

For
Non
Private
Government

The correct answer is: Non

403(b) plans are specifically designed for employees of certain tax-exempt organizations, which primarily include non-profit employers. These plans are similar to 401(k) plans, but they are tailored for the various kinds of organizations that qualify under section 501(c)(3) of the Internal Revenue Code, such as schools, hospitals, and other non-profit groups. The structure of 403(b) plans allows employees to make contributions on a tax-deferred basis, aiding in retirement savings for those employed in the non-profit sector. Additionally, public school systems and certain governmental organizations can also offer 403(b) plans, but the term fundamentally identifies their association with non-profit entities. Understanding this helps clarify that while private and government employers have their own plans (like 401(k) plans or 457 plans), the unique association of 403(b) plans with non-profits is what defines their specific function and purpose in the context of retirement planning.