Retirement & Savings

What Is a 457(b) Plan?

A 457(b) plan is a US tax-advantaged deferred compensation plan offered mainly to state and local government employees and some nonprofit employees. A distinctive feature of governmental 457(b) plans is that withdrawals after leaving the employer are not subject to the 10% early withdrawal penalty, regardless of age.

Combining With Other Plans

Because the 457(b) limit is separate, some employees with both a 403(b) or 401(k) and a 457(b) can contribute to both.

Taxes

Traditional contributions are made before tax; withdrawals are taxed as income.

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🔗 Related Terms

403(b) Plan 401(k) Plan Early Withdrawal Penalty Contribution Limit Rule of 55

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Last updated: September 29, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.