Which organizations are eligible to offer a 403(b) plan?

• A. Available for public education organizations and some non-profit employers (501(c)(3)), cooperative hospital service organizations, and self-employed ministers
• B. For-profit corporations only
• C. Government agencies only
• D. Any employer with 10 or more employees

Answer: (A)

A 403(b) plan is designed for employees of certain tax-exempt organizations and public education settings. The eligible organizations include public education organizations, and some nonprofit employers that are 501(c)(3) tax-exempt, as well as cooperative hospital service organizations and self-employed ministers. This aligns with how 403(b) plans are intended to work, providing a retirement savings option specifically for workers in education and certain nonprofits, rather than for-profit companies or government agencies.

Why the other options don’t fit: for-profit corporations aren’t eligible because 403(b) plans target nonprofit and public education employers. Government agencies typically use different retirement arrangements, such as 457 plans, rather than 403(b). The eligibility isn’t tied to the employer’s size (number of employees); a small qualifying nonprofit or religious organization can offer a 403(b) if it falls into the approved categories.