457

 

What is a 457?

A 457 plan is a tax-advantaged retirement plan for state and local government employees, as well as employees of certain non-profit organizations. A 457 plan typically allows employees to make salary deferral contributions, and it is uncommon for the employer to match. Traditional and Roth options are available, and mandatory withdrawals (RMDs) must be made at age 72, unless the employee is still working for the company past age 72.

 

TL;DR – A 457 is an employer-sponsored plan offered by governmental agencies and certain tax-exempt organizations that allows employee contributions.

 

Eligibility

  • Depends on each plan but could be 12 months of service and at least 21 years of age

Contribution Limits

  • $19,500 per year if under age 50

  • $26,000 if age 50 or over

  • Special catch-up provision during participant’s final three years before retirement that may allow increased contributions

Withdrawals

  • Traditional 457: Same rules as Traditional IRA

  • Roth 457: Same rules as Roth IRA

Taxes

  • Traditional 457: Same rules as Traditional IRA

  • Roth 457: Same rules as Roth IRA

 
Edward Oh