Another tax-saving quadrant investment vehicle is the 401(k) plan, and it's public-sponsored brethren, the 403(b) plan. Let's have a look:

401(k) plans allow workers to contribute money tax-deferred toward their retirement. Investment options are growing, with stocks and bonds the most popular choices of 401(k) investors.

Like most investments, the more you know about 401(k)’s the better your retirement will be. For example, there is a limit on how much you can sock away in a 401(k) each year, but the limit is far above the IRA cap. For 2006 the cap rose to $15,000. And, starting back in 2002, workers age 50 and older by the end of the year were allowed to make "catch up" contributions above and beyond the set dollar limitations. Back then, the catch up amount was $1,000, setting a $12,000 contribution ceiling for a worker age 50 and older. The catch up amount rose by $1,000 increments until it hit $5,000 in 2006. So, in 2006, a worker age 50 or older has a $20,000 limit -- almost twice the limit in 2001.

Clearly, Congress wants to encourage us to save for our retirements. Your personal limit depends on your salary and what percentage the company permits you to put into the retirement plan. Most firms allow contributions of between 2% and 15% of compensation. A big advantage of 401(k) plans is that many employers match a portion of the funds you contribute to your plan.

403(b) Plans -- Established under a special section of the Internal Revenue Code, a 403(b) plan is a defined-contribution retirement plan available only to employees of private organizations that are tax-exempt under IRC 501(c)(3) and to educational organizations of a state, political subdivision of a state, or an agency or instrumentality of a state.

Typically, eligible employers include nonprofit and nonpolitical religious, charitable, scientific, educational, and other public interest-oriented organizations such as private schools, colleges, universities, research institutions, and teaching hospitals. The term "qualified" is reserved for plans regulated by IRC sections 401(a) or 403(a).

The main tax advantage of 403(b) plans is the same benefit derived from 401(k) plans: Amounts contributed (other than employee after-tax contributions) and the "inside" (pre-retirement) buildup of earnings aren't subject to federal income taxes until withdrawn.

Also like 401(k) plans, 403(b) plan participants can change the rate of contributions to their plans at any time. Also, contributions to 403(b) plans can consist of employee elective deferrals, employer contributions, and after-tax employee contributions.