Which of the following must not discriminate in favor of highly compensated employees?

Section 403(b) plans are retirement savings plans for employees of public schools and certain tax-exempt organizations. These plans are subject to specific non-discrimination rules under the Internal Revenue Code that prevent them from favoring highly compensated employees. This is important to ensure that the benefits of the plan are broadly accessible to all eligible employees, not just a select group of higher earners. The non-discrimination rules for 403(b) plans help maintain the tax-favored status of these plans and ensure compliance with federal regulations.

In contrast, while 401(k) plans and defined benefit plans have their own non-discrimination testing requirements, they often allow for greater flexibility with regard to contributions for highly compensated employees, depending on the results of those tests. Traditional IRAs, on the other hand, do not have non-discrimination rules because they can be established by any individual and are not tied to employment or employee classifications.