Key takeaways

• A 457(b) is a tax-advantaged workplace retirement plan mainly offered by state and local governments and certain tax-exempt employers. 
• Governmental and non-governmental 457(b)s differ in who can participate, who owns the assets, creditor exposure, and rollover options. 
• 457(b)s have a separate contribution limit from other workplace plans, potentially allowing more retirement savings to be put in tax-advantaged accounts

A 457(b) plan can be a valuable tool for building retirement savings, allowing you to invest your money with potential tax advantages. The average retirement savings for Americans in their 60s is $1,239,932, including money held in employer-sponsored plans like 401(k)s and 457(b)s, IRAs, pensions, and other tax-advantaged plans.

If you’ve been offered a 457(b) through your employer, here are a few things you should know.

What is a 457(b)?

A 457(b) is a tax-advantaged savings plan offered by state and local governments or certain tax-exempt employers. Similar to other employer-sponsored plans, such as 401(k)s and 403(b)s, 457(b)s help employees build the savings they’ll need in retirement. Employees typically make contributions by deducting a certain amount from each paycheck — called a salary deferral. Contributions are generally made pre-tax, lowering an employee’s taxable income, though some government plans may allow for Roth (after-tax) contributions as well. 

Employers may match employee contributions up to a certain percentage or amount, depending on the plan. Once the employee retires, changes jobs, or reaches age 59½, they can begin withdrawing these funds to use for living expenses.¹

There are two types of 457(b) plans, governmental and non-governmental:

• Governmental 457(b)s are typically offered by state and local government agencies, with assets held in trust for employees.
• Non-governmental 457(b)s are generally offered to managers or highly compensated employees of certain non-governmental, tax-exempt entities. Non-governmental 457(b) assets are not held in a trust for the employee and instead remain the property of the employer until distributed.²

Both types of 457(b)s help employees build their retirement savings, yet they differ in tax treatment and available catch-up contributions. If you’re offered a 457(b) through your employer, it’s important to understand whether it’s a governmental or non-governmental plan so that you can plan accordingly.

457(b) plan eligibility

Employers offer 457(b) plans as a benefit to help employees save for retirement. Governmental 457(b)s are typically offered by state and local government agencies, while non-governmental plans are available on a case-by-case basis to employees of non-governmental tax-exempt entities such as charities and social welfare organizations.³

457(b) contribution limits in 2026

Up to $24,500 can be contributed to an employee’s 457(b)s in 2026, including employee salary deferrals and employer contributions. Additional catch-up contributions can be made to governmental 457(b)s, bringing the annual limit up to $32,500 for employees ages 50 or older. Some governmental 457(b) plans also allow employees ages 60 to 63 to contribute up to $35,750 in 2026.⁴ Beginning in 2026, those whose prior-year wages from the plan sponsor exceed the indexed threshold—$150,000 for 2026—must generally make age-based catch-up contributions as Roth contributions. If a plan does not offer a Roth option, then the employee cannot make the age-based catch-up.⁵

One highlight of 457(b)s is that they have their own salary deferral limit. Typically, the elective-deferral limit is shared across 403(b)s and other non-457(b) retirement accounts, meaning contributions across all accounts must stay under this amount.⁶ For example, individuals can contribute up to $24,500 across their 457(b)s, plus another $24,500 across other eligible retirement accounts, not including catch-ups. An additional $7,500 — plus a $1,100 catch-up contribution for individuals age 50 or older—can also be contributed to their individual retirement accounts (IRAs) in 2026. For those already contributing to a retirement plan, governmental 457(b)s can offer a way to put more money into tax-advantaged accounts.

When contributing to a new 457(b), it can be beneficial to review the details of your plan. Some plans include rules that affect contribution limits, and being aware of these can help prevent excess salary deferrals. Employers may distribute excess deferrals back to you before the tax filing deadline — typically April 15.⁷ However, it’s important to verify  such details since they often vary depending on the plan.

Employer contributions

Employer contributions to a 457(b) are included within an employee’s annual deferral limit of $24,500 (or more with catch-ups).⁸ These contributions may also follow a vesting schedule. Vesting is the process by which employees gain ownership of employer-sponsored benefits, such as contributions to a 457(b), over time. While employees always retain ownership of their own 457(b) contributions, employer matches may not always be immediately accessible to employees.

Special catch-up contributions

Special catch-up contributions are offered by certain 457(b) plans, giving employees the opportunity to put more away in tax-advantaged accounts. Some governmental and non-governmental 457(b)s allow an additional catch-up for employees within 3 years of normal retirement age (as specified in the plan). This catch-up typically permits the lesser of:

• Twice the regular annual limit, which would be $49,000 in 2026; or 
• The regular annual limit plus unused contribution capacity from eligible prior years.

However, employees generally cannot use the 457(b) final three-year catch-up and an age-based catch-up in the same year. ⁹

457(b) plan withdrawals and early retirement access

Withdrawals from a pre-tax 457(b) are taxed as ordinary income, though qualified Roth contributions can be withdrawn tax-free.¹⁰ For both governmental and non-governmental 457(b)s, required minimum distributions (RMDs) generally must be taken starting at age 73, though sometimes can be delayed until retirement. 

Individuals can generally begin taking distributions from their 457(b)s at any point after they change jobs or retire. Otherwise, distributions from governmental 457(b)s can be taken starting at age 59½, and from non-governmental 457(b)s starting at age 70½.¹¹ Amounts rolled into a governmental 457(b)s from another type of plan do not have the same withdrawal flexibility. Instead, individuals must wait until age 59½ to begin withdrawing rollover funds.¹²

Distributions from a governmental 457(b) generally are not subject to the 10% additional tax on early distributions. However, the 10% additional tax may apply to amounts attributable to rollovers from another type of qualified retirement plan or IRA.¹³ Distribution rules for non-governmental 457(b) plans differ and should be reviewed under the terms of the plan.¹⁴

457(b) vs. 403(b) vs. 401(k)

457(b), 401(k), and 403(b) plans are all tax-advantaged retirement plans offered to employees of participating organizations. They all help individuals financially prepare for retirement, yet each plan has unique benefits and rules. Understanding these may help when deciding on a savings strategy.

Read more: 403(b) vs. 457(b): What's the difference?

FAQs

What happens to my 457(b) when I retire or leave my job?

When you retire or leave your job, you won’t lose access to any contributions you’ve made to your 457(b). If you’re not 100% vested in your plan, you may forfeit a portion of your employer’s contributions, depending on your plan’s vesting schedule.

You can choose to keep your money in your 457(b), if the plan permits it. This way, the money remains invested until you’re ready to begin taking distributions. You can also roll over funds in a governmental 457(b) to an individual retirement account (IRA), which may have greater investment options. If changing jobs, you may also be able to roll over these funds to your new employer’s workplace retirement plan. Rollovers are another option for those looking to keep their funds invested in a tax-advantaged account until they reach age 59½ and begin taking distributions.

Instead, you may choose to immediately withdraw your money from your 457(b) plan. Though this is allowed, distributions are generally subject to applicable income taxes. Governmental 457(b) distributions generally are not subject to the 10% additional tax on early distributions, except that the additional tax may apply to amounts attributable to certain rollovers.

Can you roll over a 457(b) to an IRA?

An eligible distribution from a governmental 457(b) plan may be rolled over to an IRA. Required minimum distributions typically cannot be rolled over. A non-governmental 457(b) is different: Distributions from these plans generally cannot be rolled over to an IRA or another eligible retirement plan.¹⁵

Can I roll over my governmental 457(b) account while still employed?

Rollovers while still employed are only possible if your plan permits an in-service distribution. The plan must first allow the distribution, and the distribution must also be eligible for rollover treatment.¹⁶

At what age must you withdraw from a 457(b)?

Required minimum distribution (RMD) rules require that you begin taking 457(b) distributions each year starting at a certain age — currently age 73. RMDs are based on your account balance at the end of the previous year and an age-based life expectancy factor provided by the IRS. You can choose to begin taking distributions prior to age 73 and can withdraw more than the minimum required amount depending on your needs and expenses.

How much should I have in my 457(b) when I retire?

There is no set amount that you should have in your 457(b) when you retire. It can be beneficial to estimate your yearly expenses to develop a better understanding of how much you’ll need across your retirement accounts. One rule of thumb is to plan on needing between 70% and 80% of your pre-retirement income after you retire. 

Read more: Essential steps for retirement planning