Workplace Retirement Plans Help You Save

403(b) plans
Offered to employees at schools, museums and other nonprofits, 403(b) plans have long resembled 401(k) accounts with some notable shortfalls. But thanks to new rules passed in July 2007, 403(b) plans are undergoing significant changes.

Individuals will continue to fund 403(b) plans with pretax earnings, up to $15,500 per person in 2007 and $20,500 for those 50 or older. Earnings grow tax-deferred. It's not common for employers to contribute to a 403(b) on behalf of workers. Moreover, 403(b) plans have been criticized for being riddled with hefty fees and for being heavily invested in annuities that don't generate enough income for individuals to amass adequate wealth.

Another problem: Picking investments can be difficult. That's because it's common for several vendors to manage 403(b) plans within a single school district. That can be overwhelming for workers, who must make myriad choices without guidance from employers.

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