What is a 403 (b) plan? If you work for a public school or a 501 (c) (3) tax-exempt organization, a 403 (b) is a great way to save for retirement. Employee salary deferrals into a 403 (b) plan are made before income tax is paid and allowed to grow tax-deferred until the money is taxed as income when withdrawn from the plan. A 403 (b) plan (also called a tax-sheltered annuity or tsa plan) is a retirement plan offered by public schools and certain 501 (c) (3) tax-exempt organizations.