401(k) Plans & 403(b) Plans

Many states are now requiring businesses to enroll employees in qualifying retirement programs. Numerous states currently have mandated plans in place, while many more are planning to include similar requirements within this year and the next year. Penalties for non-compliance can be as high as $5,000 per year. Some states* require companies with 25 or more employees to be registered for a retirement plan before December 2022. Few other states* have similar requirements for employers with 5 or more employees.

401(k) vs 403(b) Infographic

401(k) vs 403(b)

401(k) Plan

  • Available to for-profit companies
  • Employees contribute pre-tax income
  • May have employer match
  • Contribution limits: $19,500 (2021)
  • May offer loans or hardship withdrawals
  • Investment options may include stocks, bonds, and mutual funds

403(b) Plan

  • Available to non-profit organizations, public schools, and some governmental organizations
  • Employees contribute pre-tax income
  • May have employer match
  • Contribution limits: $19,500 (2021)
  • May offer loans or hardship withdrawals
  • Investment options may include annuities and mutual funds

Similarities

  • Both plans help employees save for retirement
  • Contributions are made on a pre-tax basis
  • May offer employer matching contributions
  • May allow for loans or hardship withdrawals
*State-by-State Mandate
California
5 or more employees
Enroll by June 30, 2022
Colorado
5 or more employees
Beginning in 2023
Connecticut
5 or more employees
Enroll during 2022
Illinois
16-24 employees
5-15 employees
Enroll by Nov. 2022
Enroll by Nov. 2023
Maine
25 or more employees
15-24 employees
5-14 employees
Enroll by Apr. 1, 2023
Enroll by Oct. 21, 2023
Enroll by Apr. 1, 2024
Maryland
Not Yet Finalized
Beginning Sept. 2022
New Jersey
25 or more employees
Enroll by Dec. 28, 2022
New York
10 or more employees
5 or more employees
Enroll by Aug. 9, 2023
Enroll by Oct. 21, 2023
Oregon
4 or fewer employees
Enroll by early 2023
Virginia
Not Yet Finalized
Beginning in Jul. 2023