Key takeaways

• Roth 457(b) plans may offer penalty-free withdrawals after separation from service, regardless of age, depending on provisions and IRS rules.
• Roth 403(b) plans include higher contribution limits and may permit a 15-year service catch up.
• Roth IRAs allow contribution withdrawals at any time and have income-based eligibility.
• All three accounts may provide tax-free growth on qualified withdrawals under Roth rules, subject to IRS rules and eligibility requirements.

Roth 457(b), Roth 403(b), and Roth IRA accounts may offer tax-free growth when IRS qualification rules are met. Key differences in access rules, contribution limits, and eligibility determine which count is most appropriate for different users.

Retirement savers who work in the public sector, education, and nonprofit fields often have access to multiple. This overlap might create confusion, however, if both accounts offer one core feature: tax-free growth on qualified withdrawals.

For example, Roth 403(b)s are employer-sponsored retirement plans for schools, nonprofits, and certain tax-exempt organizations.¹ Roth 457(b)s are designed for government employees, including state and local agencies, and offer distinctive distribution rules.² Roth IRAs are individually established accounts with flexible withdrawal features and income-based eligibility requirements.

Each of these account types offer Roth treatment to contributions, but the most suitable option depends largely on retirement timing and current income level.

Read more: 401(k) vs. 403(b): What's the difference?

The “big three” compared: A quick snapshot

This table compares key Roth retirement accounts for 2026, including contribution limits, penalties, and income rules.³

FOR ILLUSTRATIVE PURPOSES ONLY.

Any earnings on Roth contributions will be taxed unless a withdrawal is a qualified distribution as defined by the IRS. For a withdrawal to be considered a qualified distribution, Roth contributions must have been in the account for at least five years, and the money withdrawn after age 59½, death, or disability. Current rules are subject to change.

Roth 457(b): A Flexible Option for Earlier Access

A Roth 457(b) functions similarly to other Roth accounts, but has unique distribution rules. Governmental 457(b) plans allow for withdrawals after separation from service without charging a 10% early withdrawal penalty regardless of age, so long as the Roth account also satisfies the 5-year requirement for tax free earnings.⁴ The 5-year rule starts on January 1 of the first year that contributions are made, and requires the account holder to maintain the account for five years before withdrawing funds. These rules may make Roth 457(b)s a noteworthy option for people who need access to funds before reaching age 59½, such as early retirees.

Contribution limits: Elective deferrals in 2026 permit up to $24,500, with an additional $8,000 catch up for those ages 50 or older.

Special catch-up provision: Some governmental 457(b) plans allow a “three-year-before-normal-retirement-age” catch-up contribution.⁵ This allows plan participants to contribute up to twice the standard annual limit across the three years leading up to their normal retirement age, so long as they have not made full contributions in previous years. This provision is plan-specific and depends on prior underutilized deferrals, meaning any eligible contribution amounts that the participant did not use in earlier years can be “made up” during the three years before common retirement age.

Roth 457(b) plans do not impose income-based contribution limits, which could make them more accessible to a wider range of public employees seeking higher savings caps and flexible penalty rules.⁶

Roth 403(b): The Teacher & Non-Profit Standard

Roth 403(b) accounts provide after-tax contribution treatment and tax-free qualified withdrawals, mirroring the Roth features found in other employer plans.⁷ They are widely used in public schools, nonprofit organizations, and certain tax-exempt entities.

The 15-year rule: Employees with at least 15 years of service at an eligible organization may qualify for an additional $3,000 per year contribution, up to a $15,000 lifetime maximum.⁸ This rule is determined on a plan-by-plan basis and requires specific eligibility calculations.

Penalties: Most early withdrawals of earnings before age 59½ are subject to a 10% penalty, unless an exception applies.⁹ Common exceptions include disability, qualified domestic relations orders (QDROs), certain medical expenses, birth or adoption withdrawals, and others. Roth 403B earnings also remain subject to the Roth 5-year rule before they qualify for tax-free treatment.

Required minimum distributions (RMDs): Roth 403(b) accounts are no longer subject to lifetime RMDs, aligning them with Roth IRAs.

Roth 403(b) plans could appeal to workers in education and nonprofit environments seeking higher contribution limits and structured payroll deductions.

Read more: Can I contribute to a 401(k) and an IRA?

Roth IRA: The Flexible Supplement

A Roth IRA is an individual account established outside the workplace. It offers broad investment flexibility and a distinctive withdrawal structure.

Flexibility: Roth IRA contributions can typically be withdrawn at any time without taxes or penalties.¹⁰ Earnings, however, are subject to early distribution rules (and penalties) if withdrawn before age 59½ and before the five-year qualification period is met.

Contribution limits and income rules: Annual contributions are limited to $7,500 in 2026, with a $1,100 catch up for individuals aged 50 or older.¹¹ Eligibility to contribute depends on modified adjusted gross income (MAGI), which phases out at higher income levels.

Because Roth IRAs are not tied to an employer and permit contribution withdrawals at any time, they are frequently used as a complement to workplace plans rather than a standalone alternative.

Key differences to watch out for

There are several structural differences between Roth 457(b), Roth 403(b), and Roth IRA accounts that could influence how they’re used for long-term financial planning.

Contributing to both plans: Governmental 457(b) and 403(b) plans operate under separate elective deferral limits.¹² This allows people to make combined contributions to both accounts within the same year, which can allow for annual Roth contributions that exceed $49,000 (when including catch-up contributions).

Investment options: Investment choices in 403(b) and 457(b) plans are limited to the investments offered by the employer, which may consist primarily of annuities or mutual funds.¹³ Roth IRAs allow a broader range of investment vehicles, including individual stocks and exchange traded funds, resulting in wider portfolio construction flexibility.

Fees: Roth IRAs may provide access to low-cost investment platforms with transparent pricing. However, many large institutional 403(b) and 457(b) plans may also offer competitively priced index funds and low-cost share classes due to their size. Total fees depend on the specific plan provider and available fund lineup.

Scenarios: Which should be prioritized?

Scenario A (Early retirement): A Roth 457(b) may be useful for workers expecting to separate from service before age 59½. Governmental 457(b) plans allow penalty-free access to funds upon separation, subject to Roth qualification rules. This could help those who want to retire early by offering a tax-advantaged way to withdraw funds before age 59½.

Scenario B (Maximum savings): High savers with access to both a Roth 457(b) and a Roth 403(b) could potentially increase total retirement savings by contributing to each account under their separate elective deferral limit.

Scenario C (Limited investment options): If an employer plan offers a narrower investment lineup, some savers may choose to contribute to their Roth 403(b) up to any available employer match, directing the rest of their contributions into a Roth IRA. This structure helps maximize the employer benefit while also allowing individuals to pursue a broader selection of Roth IRA investments.

Deciding which IRA best fits retirement goals

Roth 457(b), Roth 403(b), and Roth IRA accounts all provide Roth tax treatment but serve different needs. A Roth 457(b) can support earlier retirement timelines through penalty free post-employment access. A Roth 403(b) offers higher contribution limits for educators and nonprofit workers along with specialized catch-up opportunities. A Roth IRA remains a flexible supplemental option with income-based eligibility rules and accessible contributions. Together or alone, these accounts can contribute to long-term financial stability.

Frequently Asked Questions

Can someone have a Roth 457(b) and a Roth IRA?

Yes, contribution limits for workplace plans and IRAs are separate, allowing participation in both accounts during the same tax year.

Does the 5-year rule apply to Roth 457(b) accounts?

Yes, the Roth 5-year rule governs tax free treatment of earnings. The 457(b) separation-from-service-rule affects the penalty, but not the taxation of earnings.

Can a Roth 457(b) be rolled into a Roth IRA?

Yes, However, once funds are rolled into a Roth IRA they become subject to Roth IRA withdrawal rules, including the loss of the 457(b)’s penalty free access after separation from service. Governmental 457 funds rolled into another type of plan or account may become subject to the 10% early withdrawal penalty if taken before age 59½. Assess the benefits of current accounts before moving money.