when the 403 b was invented in 1958 it was known as a tax sheltered annuity 6 a 403 b may offer a narrower choice of investments than other plans although these plans offer mutual fund options inside variable annuity contracts contributors can only choose between fixed and variable contracts and mutual funds inside these plans securities such as stocks and real estate investment trusts reits are prohibited 7
earnings and returns in regular 403 b plans are tax deferred until they are withdrawnmany 403 b plans vest funds over shorter periods while some vest immediatelyemployees with 15 or more years of service may make additional catch up contributionswithdrawals before age 59 are subject to a 10 tax penaltyplans may offer narrower investment choices than other plansaccounts within a 403 b may lack the creditor protection provided by other plans