What limitation exists for investments in Section 403(b) plans?

Investments in Section 403(b) plans are primarily limited to mutual funds and annuities. This restriction reflects the nature of 403(b) plans, which are designed for employees of certain tax-exempt organizations, such as schools and hospitals. The inclusion of mutual funds and annuities allows participants to have a diversified investment strategy while providing a level of risk management through professionally managed funds or the structured benefits of annuities.

The specific focus on these types of investments helps to ensure compliance with regulatory requirements, which emphasize investor protection and capital growth over time. By restricting investments to these vehicles, 403(b) plans align with regulations that govern retirement accounts, safeguarding participants from overly speculative or high-risk investments that could jeopardize their retirement savings.

In contrast, the other options provided are not accurate representations of the restrictions associated with 403(b) plans. The limitations on investment choices within these plans are specifically defined, making the correct understanding of the types of acceptable investments crucial for those participating in them.