Much like a 401(k) plan has become a crucial piece of the puzzle to attract and retain employees in the for-profit sector, 403(b) plans do the same for public schools, religious organizations and other tax-exempt groups.
Employees can benefit from a 403(b) plan even if the employer makes no contribution. Employees voluntarily elect to make pre-tax contributions through payroll deductions up to an annual maximum limit.
Often, the employer will match some portion of the amount deferred by the employee to encourage greater employee participation. For example, an employer can contribute a 25% match on the first 4% deferred by the employee, or 50% for the first 5%, or any pre-established percentage the employer chooses.