A "tax-sheltered annuity" is a retirement plan for employees of tax-exempt organizations, public schools, colleges or universities, churches, or public hospitals. It is also called a "Section 403(B) plan" because the plan structure derives from Section 403(B) of the Internal Revenue Code. Basically, 403(B) plans are similar to 401(k) retirement plans that are maintained by for-profit entities. Just as with a 401(k) plan, a 403(B) plan lets employees defer tax on some of their salary. The deferred money goes to a 403(B) plan sponsored by the employer. This deferred money generally does not get taxed by the federal government or by most state governments until distributed.