457

457

A retirement investment plan for employees of state and municipal governments in which a contributor defers taxation on contributions until after withdrawal. A worker places a portion of his/her pre-tax income into a 457 account and allows it to be invested. Taxation is deferred until withdrawal from the account, generally after retirement. 457s are employee benefits, and workers must have a sponsoring employer, such as a public school or a church, in order to take advantage of one. It is equivalent to a 401(k) and a 403(b); the main structural difference is that 457s may allow for higher catch-up contributions.

---

457. These tax-deferred retirement savings plans are available to state and municipal employees.

Like 401(k) and 403(b) plans, the money you contribute and any earnings that accumulate in your name are not taxed until you withdraw the money, usually after retirement. The contribution levels are also the same, though 457s may allow larger catch-up contributions.

You also have the right to roll your plan assets over into another employer's plan, including a 401(k) or 403(b), or an individual retirement account (IRA) when you leave your job.