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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.


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.

References in periodicals archive ?
Plans referred to as 457s appear in the spotlight less often than other defined contribution (DC) plan types.
Many governmental entities that have frozen their defined benefit (DB) plans or that are trying to withdraw from state plans have been tying 457s to DC plans.
457 plans are most commonly associated with governments.
According to Kidwell, "For tax-exempts, particularly in the health care market, not one client hasn't adopted a 457 plan for management," because management may double deferrals.
A governmental 457 plan may use Roth and automatic plan features; however, these options are less common in the 457 than the 401(k) market, because governments are slower to make decisions, Kidwell says.
Observing that sponsors must get operations under control, he acknowledges that some traditional practices of 457 plans make this difficult.
3) Other factors contributing to increased employer take-up of 457 visas include record low unemployment, genuine skills and labour shortages in some sectors such as resources, and a large and growing supply of temporary residents in Australia on other visas who are willing to take up 457s.
The gazetted minimum salary for 457s is reviewed annually.
Do not prohibit the displacement of Australian staff and their replacement by 457 visa holders (either before or after the employer engages 457s), or local staff being required to train their 457 visa-holder replacements.
DIMA enforced tighter rules in this area from March 2004, including stricter enforcement of the rule that recruitment companies sponsoring 457s must be the 'direct employer' of the 457 visa holder, with full responsibility for salary payment to the 457 visa holder, and day-to-day supervision, among other things.
From March 2004, time limits were imposed on 'benching' 457s.
Until recently, 457 rules also did not require 457s to have any minimum English language skills (a serious occupational health and safety issue in higher-risk occupations) or to have their qualifications assessed by an Australian accrediting body, unlike skilled migration in the permanent residence visa program.