As the rules governing retirement plans have evolved, most of the types of retirement plans that private companies can use may also be implemented by a 501(c)(3) nonprofit organization. A nonprofit could choose a 403(b) or 457(b) type of plan, which are limited to the government and nonprofit sectors. Annual contribution limits for nonprofit employees now mirror the limits set for business employees.

403(b) Salary Deferral

Step 1.

A 403(b) tax sheltered annuity plan is the nonprofit equivalent of the corporate world's 401(k), and the annual contribution limits are the same for the two types of plans. The IRS adjusts the maximum contribution limit each year. For 2013, an employee in a 501(c)(3) can defer up to $17,500 into her 403(b) account. Employees over age 50 can add $5,500 to the contribution limit. The total maximum contribution including employer participation is $51,000 or 100 percent of compensation for 2013.

457(b) Plans

Step 1.

A 457(b) deferred compensation plan can be used by a nonprofit to offer employer paid or employee salary deferral retirement savings. The major benefit of the 457(b) plan is that it can be offered to a limited number of employees, such as the top management team. For 2013, the maximum combined contribution by employer and employee is $17,500. Employees in their last three years before retirement are allowed to contribute up to double the regular limit -- $35,000 in this case.

Defined Benefit Plans

Step 1.

A defined benefit retirement plan is the type that pays a percentage of an employee's final salary as retirement income. With this type of plan, the annual contributions are based on the employee's salary and age. How much the nonprofit must contribute is determined by an actuary specializing in this type of plan based on all of the employees covered in the plan. If you work for a 501(c)(3) organization with a defined benefit plan, your major concern is whether the plan has been adequately funded by the organization. Senior management or the board of directors can provide this information.

Small Business Retirement Plans

Step 1.

A nonprofit can elect to use one of the retirement plan options available to for-profit small businesses. These plan types include payroll deduction IRA, SEP-IRA and SIMPLE IRA. For 2013, contribution limits for these plans are as follows:

Payroll deduction IRA: $5,500 -- plus $1,000 if over age 50. SEP-IRA: Employer paid up to 25 percent of salary maxed at $51,000. SIMPLE IRA: $12,000 -- plus $2,500 if over age 50.

A nonprofit can also adopt a 401(k) plan, which would have the same contribution limits as a 403(b) plan.